Bogleheads 3 Fund Portfolio - The Ultimate Guide

The Bogleheads 3 Fund Portfolio is probably the most popular lazy portfolio out there. In this video we’ll take an in-depth look at what it is, why you'd want to use it, its historical performance, and how to build it with low-cost index funds.

// TIMESTAMPS:

00:00 - Intro
00:26 - What Is the Bogleheads 3 Fund Portfolio?
01:54 - Why Index Funds?
05:00 - Bogleheads 3 Fund Portfolio Benefits
09:29 - Choosing Assets and ETFs
09:55 - Why International Stocks?
12:33 - Bonds
13:13 - Why No International Bonds?
14:39 - Bogleheads 3 Fund Portfolio Portfolio Performance
15:28 - How To Build the Bogleheads 3 Fund Portfolio with ETFs

// SUMMARY:

The Bogleheads 3 Fund Portfolio is arguably the most popular lazy portfolio.

“Bogleheads” are followers of the advice of the famous Jack Bogle, founder of Vanguard and the father of index investing. The Boglehead philosophy is:

Develop a workable plan.
Invest early and often.
Never bear too much or too little risk.
Diversify.
Don't try to time the market.
Use index funds whenever possible.
Keep costs low.
Minimize taxes.
Invest with simplicity.
Stay the course.

The Bogleheads 3 Fund Portfolio is a simple portfolio comprised of 3 broad index funds – a total U.S stock market index fund, a total international stock market index fund, and a total U.S. bond market index fund.

Taylor Larimore, “King of the Bogleheads” and co-author of The Bogleheads Guide to Investing and The Bogleheads Guide to the Three-Fund Portfolio, succinctly summarizes the benefits as follows:

No advisor risk.
No asset bloat.
No front running.
No fund manager risk.
No overlap.
No sector risk.
No style drift.
Low tracking error.
Above-average return.
Simplified contributions and withdrawals.
Consistency.
Low turnover.
Low costs.
Maximum diversification.
Portfolio efficiency.
Low maintenance.
Easy to rebalance.
Tax efficiency.
Simplicity.

A one-size-fits-most 80/20 allocation for the Bogleheads 3 Fund Portfolio is:
60% total US stock market
20% total international stock market
20% total U.S. bond market

Using Vanguard ETFs and mutual funds, that means:
60% VTI or VTSAX
20% VXUS or VTIAX
20% BND or VBTLX

#lazyportfolio #3fundportfolio #bogleheads

// INVEST

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[surfrduede]

This is now THE reference video for the BH 3 fund. Thanks John!

[Cardboard_vr-rq]

Thanks you’ve basically done a lot of hard work reading the boggle heads books and distilling it into these videos, and you have done this for free (apart from your YouTube revenue of course 😊)

[HamiltonRb]

I'm not sure what the symbol is in the US, but in Canada you can buy VGRO or VBAL, depending on your risk tolerance. They are both by Vanguard, with very low fees, diversification of global stock & bonds in a single etf, and they rebalance for you twice a year. It simply doesn't get easier.

[willbobig]

This video is exactly what I needed. The 'youtube' portfolio of SCHD/SPY/QQQ is absurd and unfortunately makes a strong recency bias claim. VTI/VXUS/BND & DONE.

[ehochmuephi]

Thank you very much for that insight and the amazing effort. I will watch this video again sober, but it somehow is the first finance video I am whatching where I am actually buying what you're saying. Gonna do my own research after this but thank you so much for pushing me in this direction. Great stuff!

[andrewvillanueva]

Fantastic video. Great explanation and breakdown. Subscribed immediately after.

[TJ-Stackin]

Brilliant video, brother! I'll share with fam and friends!

[Savsal]

Thanks for putting in the time and work for this video it’s a great video and the content is really good.

[PixilEyes]

85% VT, 10% AVDV, 5% AVUV here. Boglehead with a slight small cap value tilt.

[thanhdang]

International bonds lower the return. Bond return is equal to current yield. US bond yield is 4%, Eurobond yield is 2-3%, and Japanese Bond is 1%. Emerging market bonds are worth looking at, according to professor Burton Malkiel.

[TyGuyTV]

I love this video, it goes a great job explaining the 3FP and adds a lot of additional value. One thing I would like to know more about, is the philosophy for what type of accounts to use this strategy within for tax purposes. Thanks!

[J-YouTube]

Thanks. I'm still not totally convinced on international stocks but I'm about to watch your video on that!
Great, easy to understand content on this channel!

[mattinterweb]

My main concern as a 50 yr old setting up a 20 year investment plan is the large amount of bonds in this portfolio when they have performed so badly for the last decade. I understand the importance of diversification, but the uncorrelated benefits have come into question in recent times to.

[osn]

Could you please make a video of BND vs TLT for diversification benefits ?

[peterlanger]

I would appreciate your thoughts on this 3 fund variation that would take into account a factor tilt for a 60-40 portfolio. AVUS for US stocks, AVNM for international stocks and either BND or AVIG for bonds. For that matter, what's your view on a 1 fund portfolio like AVMA? Thank you and I really like your website!

[TheCodesterr]

I’ve been investing in a Target Retirement Fund and VTSAX in a Roth, and Target Retirement Fund in 401k. Should I pull out of the TRF and invest in the other two? Can/should I do the same with 401k?

[randomjoe]

Great vid! What are your thoughts on a factor tilted boggle head portfolio?

[smalltalk.productions]

Thank you for the effort and sharing. I am an appreciative subscriber. My only question: BND for bonds rather than short & intermediate Treasuries? Thumbs up.

[realmisr]

Thank you! Can you please give a fidelity version of these picks?

[NivHaramati]

Thanks for a great video!
Question: Why use separate ETFs for U.S and Ex-U.S. ? Why not just have VT or AVGV or other globally diversified fund (and add the bonds ETF)? VT is slightly more expansive by a few points (0.07% currently if I'm not mistaken), but will automatically reflect the true aspect ratio of US/WORLD by market cap without you worrying about it, and is much more agnostic as a buy, hold and forget tool.