Why The 3 Fund Portfolio Is King

There’s a very easy “do it yourself” method to investing that not only outperforms the vast majority of retail and professional investors, but also saves you a ton of time, energy, and money along the way.

And that investing method is called...wait for it...The 3 Fund Investment Portfolio.

In this video, I’ll show you what makes the 3 fund portfolio so successful, the steps to properly create this portfolio in your own account...which aren’t always so obvious, I’ll give you a list of the funds needed to create the portfolio, and show you the actual historical returns based on a few backtested 3 fund portfolios I put together.

Check Out My Recommendations (It helps support the channel):

00:00 Intro
00:46 What Is The 3 Fund Portfolio?
01:43 Benefits Of Using Total Market Index Funds
02:15 3 Fund Portfolio Benefit #1
02:33 3 Fund Portfolio Benefit #2
05:01 3 Fund Portfolio Benefit #3
06:14 3 Fund Portfolio Benefit #4
08:09 3 Fund Portfolio Benefit #5
09:05 The 3 Funds To Invest In
11:07 3 Fund Portfolio Asset Allocation
14:33 International Asset Allocation
15:20 When To Rebalance 3 Fund Portfolio
15:42 How To Apply The 3 Fund Portfolio

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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio. Always remember that incentives determine the type of advice they give you so one that charges an hourly fee is less likely to be problematic.

[JarradMorrow]

Check Out My Recommendations (It helps support the channel):

[hilzabub]

My wife and I were 100% in stocks in the middle of that drop in 2007. It was painful, but we kept adding new money all the way through. A few years later we looked like geniuses. So I think I can handle the swings.

[TheBassicBassist]

This is one of the most important investing videos ever. Your closing thoughts, along with the varying strategy options, while maintaining the singular strategy, were phenomenal. Thank you for summing it up so well

[kevinmendoza]

I think this may be your most important video. I watch it a few times a month to help keep me focused on the 3-fund strategy. So easy and so effective. 1. VTI 2. VXUS 3. BND all the way! Thank you again Jarrad!

[montanaarmwrestling]

This video made me subscribe. Specifically the part where you discussed the risk and reward of the stocks vs bonds. I'm new to investing in a Roth IRA and this is very helpful. Thank you!

[amardeepchawla]

Loved the clarity in your content. My fundamentals are now in place. Thanks for doing this.

[LietSayri]

Subscribed. You have a fantastic straightforward style of explaining how investing works and why (and the tables were really helpful to compare also). Thank you for the video!

[kaustshroff]

Where have you been all my life? Like why do we make investing this mythical thing that normal ppl can't understand?
Never change. Stay this clear and concise.
Subscribed!

[EricMcDowellegm]

Just discovered your channel and subscribed. So glad I found you. Thanks for what you do, Jarrad!

[RiceWon]

I appreciate this, especially the "3 Fund Portfolio Benefit #2" section, regarding fiduciaries having to legally act in YOUR best interest vs a general fund manager. Go fiduciaries!

[cvinthe]

Very clear, concise, and valuable advice. Thanks for posting this.

[milostea]

at 11:08. Thanks for showing the drawdowns for each allocation. People react very differently when the "rubber meets the road" in a stock market downturn. One may say "I can handle a 30% drawdown" but in reality a much lower value is when they "throw in the towel". Great Info!

[StudCity]

You had me reeled in at 6 years of chipotle😅 Well put together video mate

[GoodTrylel]

Great video! I was wondering, how do you go about rebalancing within a taxable account? Since you'd likely want to avoid triggering any taxable event. When rebalancing, would I just focus on adding more money within the allocation that is lower?

[adkforester]

I like how that worst year for 100% bonds was down 2.66% until 2022 down 10+% YTD. Just goes to show you need a margin of safety built into all strategies.

[rotocoach]

In the Total market allocation, I like to add at least 20% into small cap value (using the ETF AVUV or IJS), which has been shows to give higher returns than a traditional total market portfolio

[Germ]

Wow just want to say awesome quality video and one of the best I have come across on index fund investing. Got so much value 👍.

[stevetrei]

Hi Jarrad, thanks for the videos, really good content. I have a quick question about the 3 fund portfolio. I currently do not have this mix and my fund are heavier towards US Growth stocks. With market down like it is now, would you start reallocating to the 3 fund mix now or wait to see if the market recovers? I have a bit of a fear of missing out that if I start moving money towards bonds that it’ll take longer to recover.

[Oivey]

Good advice to keep investing no matter what's going on the world, especially today with inflation, gas prices & the war in Ukraine. I kept on investing in 2008/2009 when others dropped out, and recovered well. I have a Vanguard TDF fund which has all your recommended funds under one umbrella (except that I think they allocate a bit too much to international, but it wasn't enough to sway me to go somewhere else) with an allocation that was appropriate for me. Now I'm hunkering down, especially with the dow dropping 1200 points today, and trying to weather this black swan storm since I know I'll be OK in the future. As Jack said...stay the course.

[liptongtr]

Thank you, your the first person thats helped me to understand why to diversify even if your young, basically for your own mental health.