Simple Investing Portfolio for Beginners | Three Fund Portfolio

Here's an easy, simple, and passive investing strategy for ANYONE, especially beginners. It's called the Three Fund Portfolio. Enjoy! Instagram: @humphreytalks

Resources in this video:

🖌 Links:

🖌 Free Stocks:

What is a 3 fund portfolio?
- A three fund portfolio is an investing strategy that consists of buying 3 basic asset classes in the form of an index funds: one for total domestic stock market, one for international, and one for a bond fund.
- Explain what an index fund is.
- So in this strategy, we’ll be using Vanguard Index Funds, you’ll want one fund for the total domestic stock market, one for international, and one for a bond fund.
- The tickers that most people tend to buy are: VTSAX, VTIAX and VBTLX.
- I’ll explain how to buy these later, and what type of percentage of each you should own, and also a modification that I make specifically on my own, but for now lets talk about WHY the 3 fund portfolio reigns supreme.

Why should you invest in a three fund portfolio?
- In any great investing strategy – what we want to look for are investments that are 1) Simple, 2) Diversified, 3) Have low fees, 4) Have a good risk/reward ratio.
- A three fund portfolio offers simplicity – it’s only three funds
- It offers diversification – each index fund that tracks these markets has over 10,000+ securities.
- No manager risk (mutual fund), in a mutual fund, they’re professionally managed and the fees are higher – but you talk about that in your earlier video.
- Now in order to buy Vanguard funds, I want to note that these are all vanguard index funds can be purchased on Vanguard, Fidelity, or TD Ameritrade, but if you DON’T have any of those platforms, they are also available in their ETF versions as VTI, VXUS, and BND on many other platforms.

How to allocate:
- So basically we understand the concept of the three fund portfolio now, but how should we divvy up our money in this strategy?
- There are a bunch of allocations in this strategy ranging from:
- First you need to decide how risky you want to be. If you’re young, you may be able to be riskier than someone who is approaching retirement age. In your case, you want to choose an allocation of the three funds that will give you the biggest benefit to upside throughout time.
- Something like 60% US, 30% Intl, and 10% Bonds might work well. The reason you don’t want a high proportion of bonds right now is that bond returns have been poor with 30 year treasuries only near 1%. What you can do is substitute your US bond fund with an all world bond fund etf, such as BNDW – that’s what I personally hold.
- Anyway lets look at some historical returns of the allocations:

Disclaimer: I am not a financial advisor, any investment commentary are my opinions only. Some of the products and services that appear on this channel are from companies that I have an affiliate relationship with, such as Robinhood, for which I recieve a small percentage made via those links, but it doesn’t cost you anything extra!

[harrisonmichael]

Great video. We all strive for financial independence and better life. It’s not difficult in achieving this through the right investment, living frugally, and budgeting. I’m glad I learned early in life to work hard for financial freedom

[chrisanthony]

Retired with a 7 figure portfolio and Receiving about $43k in dividends. I have been in the Stock market about 20 years. Am I worried? Am I selling? Absolutely not. I have purchased growth stocks too a little at a time over the past few weeks. I am going to sit back and observe how this all plays out, adding more at a time. my investment strategy with my FA actually calms me down. Eye on the prize, stay the course!

[cash]

Thank you for including visuals, alot of people dont do that. Cheers to all the visual learners out there 🍻

[SunnySchmuck]

Really appreciate the additional “spark notes” in the description. I have a tendency to watch videos and then go to write things down and catch myself thinking “crap what was the phrase they used?” Helps a lot!

[lakshmisp]

I watched about 10 of your vids in past 3 days. I like it that u made them bite sized, I gained a lot. You are right, they don't teach this in school and absolutely should. I will go through rest of your videos.

[hmj]

My takeaway is I think you should stay 80/20 practically until you are 3-5 years from retirement, then at three years go straight to 20/80 and call it done. If you look at the historical returns portion of the video, in any consecutive three year period you are never negative for the sum of those three years. I get why some may want to gradually get themselves from 80/20 to 60/40, then to 40/60, and finally to 20/80 but I just don't see the point, given the fairly large sample size we have.

[nancydavis]

I use 3 fund with Roth IRA fidelity 🙌🏼 2 months ago I exchanged my bond index for a small cap value mirroring the Russel. It’s weighted 10% right now and I’ve seen great returns. I’m at 65-70% total market and 20-25% international. I’m 31 so aggressive is good!

I’ve read about keeping 5% small cap value in addition to the standard 3-fund has show greater returns. I might stick with that and reallocate when I add bonds in to get more conservative over time.

[ZaidProductionsXO]

DUDE. That intro is absolutely FIREEE 🔥🔥🔥🔥

[sirajsharif]

Thank you Humphrey. Best YouTube trader. I love how u explain it all properly. Thank you mate

[dynhamik]

Thank you very much for this. My wife and I opened a VTSAX in January and have been putting quite a bit into it, and I've been looking to start diversifying next year. Much appreciated.

[js-vpfc]

what would be the equivalent of VTSAX, VTIAX, and VBTLX for fidelity? thanks and awesome vids

[hello]

I’m a current college student and I love your videos. I’m also passionate about finance and these videos help! I’ve been bullied online for my passion on Finance but that won’t stop me from learning more about finance.

[foxglove]

Can you make a video comparing vanguard index funds vs other index funds like fidelity?

[kellygee]

The videos keep getting better and better. Love that intro!!

[EKJ_]

I’m a 17 year court employee with a 401a and 457. I’ll be starting a RothIRA this week and this video helped. You got a new subscriber.

[JazzReviews]

I have made 250 dollars in 3 months on my Roth ira account just by listening to his investing tips. Thank you Humphrey!!

[miken]

When interest rates do rise, the bond funds will loose market value. I don't no how long the Fed will be able to force low rates. Zero rates are insane

[michaelta]

YANG GANG! Really educational video and simple to understand. 'preciate it Humphrey

[cristianvaladez]

What are your thoughts on just putting Roth IRA Investments into a Target Date Fund? Is the Three Fund Portfolio method more effective?

[alezyvette]

What is your opinion on investing in Index Funds through a Roth 401k (through my workplace for example) AND investing through a separate personal brokerage (ie. Fidelity) at the same time?