Bogleheads 2 Fund Portfolio - A Simple, Effective Investing Strategy

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A Bogleheads 2 Fund Portfolio is a simpler implementation of the popular Bogleheads 4 Fund Portfolio that is globally diversified in stocks and bonds. Here we’ll look at its components and the best ETFs to use for it in 2023.

// TIMESTAMPS:

00:00 - Intro
00:12 - What Is the Bogleheads 2 Fund Portfolio?
02:24 - How To Build the Bogleheads 2 Fund Portfolio with ETFs
02:40 - Outro

// SUMMARY:

The Bogleheads 2 Fund Portfolio is just a simpler version of the popular Bogleheads 4 Fund Portfolio (that holds global stocks and global bonds), which is just the Bogleheads 3 Fund Portfolio + international bonds.

A 2-fund version of a Boglehead strategy is the least popular of these 3 portfolios, so I’m not going to spend time here going over the benefits of things like indexing and global diversification. If you’ve landed here, you probably already know those things. If not, go watch my video on the Bogleheads 3 Fund Portfolio first and then come back here.

The point of this video is just to show how a Bogleheads 2 Fund Portfolio is the simplest, most agnostic implementation of global indexing for stocks and bonds outside of a target date fund, and it can be implemented with low-cost Vanguard funds. As such, it makes a nice choice for Boglehead purists and minimalists. This is more important than it may seem at first glance, as simplicity in portfolios is extremely valuable psychologically and its benefits are often overlooked.

Using 2 funds eliminates the need to choose how much money should go to the U.S. and how much money should go to international markets for both stocks and bonds, type(s) of bonds, and bond duration. This approach lets the market decide those allocations, assets, and effective duration based on their relative market cap weights.

As such, this is again the most agnostic, hands-off way to implement this type of Boglehead strategy, which effectively saves the investor a lot of mental effort and mitigates uncertainty and the investor’s own biases. Using 2 funds instead of 4 funds also simplifies rebalancing, saving the investor time as well.

Thus, an 80/20 allocation for the Bogleheads 2 Fund Portfolio is as follows:
80% Total World Stock Market
20% Total World Bond Market

We can construct the 80/20 Bogleheads 2 Fund Portfolio using 80% VT, the Vanguard Total World Stock ETF, and 20% BNDW, the Vanguard Total World Bond ETF.

#bogleheads #indexinvesting #portfoliodiversification

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