Why The 3 Fund Portfolio Is King
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- čas přidán 29. 06. 2024
- 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.
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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.
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Love Fundrise and M1finance! Has helped me a lot the last year and a half
Hi Jarrad, just starting out with investing... Can you buy vanguard index funds and vanguard ETFs through M1 Finance? If so, are there any additional fees/commissions/etc if I bought vanguard index funds or ETFs via M1 as compared to directly through a Vanguard account? Or what about through other brokers like Fidelity or TD Ameritrade? Thanks for your videos!
@@jnlin8569 You van buy Vanguard ETFs on M1 Finance, but not their index funds. Their index funds are only available through the Vanguard platform. The good news is that there's usually an ETF version of all their index funds so you're essentially investing in the same thing. There aren't any additional fees through M1 Finance. There aren't additional fees through Fidelity or TD Ameritrade either. I personally prefer the M1 Finance user interface and features over the others, but if you prefer any of the other platforms then go with those ones.
@@JarradMorrow Thanks for your response! So to compare the cost of Vanguard ETF vs Vanguard Index Funds I would just need to look at their expense ratios and nothing else right? Was just trying to see which one was least expensive...Thanks!
Correct. The ETFs will usually be a little cheaper. Not always, but most of the time.
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.
This stock heavy strategy can expose the investor to undue risk. Diversify ppl.
@@Tyler-rc1wu I think it also depends on ones age when I was 20 and maybe only had 10k in my name then I was more Willing to go 100 percent stocks than now 10 years later when I have more money
@@Tyler-rc1wu It's called risk tolerance and everyone's is different. What is right for you won't work for everyone. Be careful not to project your personal values onto others.
How you doing today?
I only own 7 individual stocks
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
Loved the clarity in your content. My fundamentals are now in place. Thanks for doing this.
Glad it helped!
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!
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!
Awesome, thank you!
Yes, I love the tables
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!
Glad it was helpful!
Best financial advise ever this video and trust me at 70 years I have tried plenty of investment strategies. Besides Jarrad, the only other professional you need to reach total financial independence is a good accountant/registered agent as Bob Brinker used to say. Thanks for keeping us grounded Jarrad!
Which broker do you use?
@@garymcfadden2797 My father used to listen to Bob Brinker on the radio from back in 1998 when he would buy MSFT and QQQ at the $25 low in 3/2003 and the same low price in Oct 2008. 100K in QQQ was worth $1,600,000 at the recent $408 peak. He only buys and holds as he hates paying capital gains.
d
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!
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!
Very clear, concise, and valuable advice. Thanks for posting this.
Your welcome! Thank you for the feedback!
Just discovered your channel and subscribed. So glad I found you. Thanks for what you do, Jarrad!
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 👍.
Much appreciated!
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
You're like the 15th comment I've received over the past few weeks about allocating a portion of your money towards SCV. Didn't realize how many of you are out there doing this 👍🏻
@@JarradMorrow It's probably due to a popular (and very technical) youtuber Ben Felix. He goes through a lot of academic research in his videos, and his most cited work is the Fama-French 5 factor model, where the small cap and value factors have historically outperformed the overall market (but are more volatile as well).
That's redundant. VTSAX already has small and mid-cap exposure.
@@Dino-sx9ct no it's not. VTSAX is only giving you market exposure (the weight in small/mid cap is in the weight of the market.) To get exposure to the small-cap value premium, you have to have larger weight in those stocks.
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!
👍
Thank you, your the first person thats helped me to understand why to diversify even if your young, basically for your own mental health.
Listened to this vid like 10 times through this weekend. Thanks dude.
Glad it helped!
Good points! The 52% drawdown reminds me of how it has been recently, October 2022, with the market decline
It's so important to understand the drawdown potential for each portfolio which I've never seen someone here on CZcams mention.
@@JarradMorrow good point 😊. On a similar note, it’s been stressful watching NVDA decline month-to-month, yet I’m still adding to my position, since I believe NVDA is the future of many things (or, at least, something that won’t go away).
@@JarradMorrow It's the most important point. It's easy to bash financial advisors 'because they take a piece of my money', but truth be told, most individual investors don't have the discipline to hold on when their money is cut in half. A good advisor can set these expectations and coach you through it.
It's easy to bash financial advisors who charge an ongoing % based fee because they deserve to be based. Those types of advisors are most likely screwing over investors because their incentives aren't aligned with what's best for the investor. The better type of advisor are the ones who are true fiduciaries that charge by the hour.
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.
I’d like to understand what you’re saying but I don’t. Saying bonds down a good thing. Hope you’ll answer
Your videos are great man, thanks for all your help.
Glad you like them!
Lol The algorithm finally showed me this video. What an amazing and simple ideology for being a good Stewart with your money. Thank you.
Great content! The financial advisory industry needs a major revolution!
👍
Just changed my M1 Finance pie to VTI, VXUS and BND. Thanks so much for this
Glad it helped! Let me know if you have any questions!
Very helpful. Based out of india , I plan my daughter's investment who is in USA courtesy your inputs
What was the percentage of allocation in M1?
Thanks for the advice!
Very grateful to you for your hard work and research!! Thank you!
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.
Did you watch the interview Jack did with motley fool? Funny anecdote with an airline pilot. Jack told him to keep investing the same amount every pay day. And not to peak at the total until retirement.
Great video! I've been giving myself a crash-course in investing the past 3 weeks. The one thing I've heard that you didn't mention was that besides not panicking when the market is low, this may also be a great time to buy more, as you get stcoks, ETFs, etc. as a lower price.
Good point!
It’s a great advice! That’s pretty much all of it.
This was super helpful for a newbie! thank you
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?
I'm not a fan of rebalancing because it's mainly a risk-management strategy, not a growth strategy. I started out 60/40, but I let it evolve to a current 80/20 while I reinvested all dividends back into the ETFs automatically--even the BND. This gives me more shares that pay me more in dividends, which I think is better than realizing taxable gains only to throw them into losing bonds on top of the automatic dividend reinvestment.
Rebalancing in a taxable account doesn’t always make sense. But if you want to stick to a target allocation then rebalancing makes sense in a tax advantaged account to get you back to where you want to be. Sounds like you wanted to change your allocation which makes sense why you didn’t want to rebalance back to 60/40
You can always rebalance by buying only.
I cut off buying bonds for awhile because the bonds were ahead.
Yep. Been in the market for 15 years and never bought a bond. Just been In the S&P 500 95%. It’s giving me the ability to retire before 40!
@@suavemaurice ...Question, if your bonds were performing so well that they were outperforming everything else, why cut off buying more bonds and cutting off that great growth? Just trying to understand as a new investor...
@@reaperboy7274 It may surprise you to know that your allocation has little effect on the ability to retire as early as age 40. What's driving your accelerated retirement date so much is your savings rate more than anything else.
great video... just went on my own and starting to build my 3 fund portfolio...
Fantastic!
I love how you put everything in terms of burritos!
In Canada it is a little more complicated because we have a tax advantage to investing in Canadian stocks, so I do the same but weighted to Canadian equity by getting an all caps TSX ETF as well.
Could do those swap based etfs like hgro, so the dividends are in the price instead of paid out just to reinvest it anyway .
But Canadian stock market doesn't perform as well as the US?
it's all about the 2 fund portfolio - Total US Stock and Total International. 100 percent equities for the win!
Great video. Thanks for sharing!
Thanks for watching!
Excellent info for every type of investor. TOPS.
Glad you think so!
Thanks for the advice. Quick quesiton, how does continued investment apply in a situation where I am just planning to buy index funds (non ETFs)? Once I buy them, wouldn't I just need to leave them alone aside from yearly check-in?
Yes, just leave them alone. If you can handle looking without allowing it to mess with you emotionally then do it. If it messes with your emotions then check in every 6 months to a year
Apart from my 98% in index ETFs I also invest 2% in pet individual stocks just to keep things interesting and fun. In my case I have invested 1% in a US listed geothermal company and 1% in a Canadian listed EV company that makes trucks and school busses. So far one did very well and the other not so much; but both are fun and interesting to follow and learn about.
As fun investment, you should keep it below 1m USD into a single company. So, maybe you should spread your fun investment to more companies.
You had me reeled in at 6 years of chipotle😅 Well put together video mate
Thanks Jarrad. I like your channel.
Glad you enjoy it!
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.
I don't like total market funds if they are market cap weighted because you wind op being way too heavily invested in mega cap companies like Apple and Google and way to little invested in the small and mid cap companies that can really supercharge your returns. That said, this is a solid strategy for someone who wants a set it and forget it portfolio that they only have to look at once a year. However, I think rather than investing in these total market funds, it's a better idea to build a 5 or 6 index fund portfolio that allows you to weight small and mid cap stocks a bit more heavily.
What would be some good index funds / ETF that have a good balance ?
Great information thank you so much .
Glad it was helpful!
that max drawdown happened to me in 2008. I simply didn't look at it more than 1 time for 3 years. It came back and I'm doing very well, even when actual advisors look at my portfolio. So sometimes you really do have to know when to hold them and when to fold them. I'm getting a bit too old to risk like that much longer.... but... 🙂 Everything you are saying I have been doing since 1995 except my new stuff is in a ROTH 401k. Great video.
Great Info! Bonds aren’t looking so great right now with rising rates and inflation. Would you avoid bonds at the time?
I’ve heard some people say it’s the perfect time to get into bonds since they are at an all time low. Not sure how true that is.
Just like stocks, bonds will fluctuate. Buy and hold instead of trying to trade in and out of them.
I'm currently 100% VTI in my Roth. Living dangerously
😂 I like it!
Same
Go bold or go home.
Yup 👍🏽
Same. There’s a lot of large cap so it’s diversified too
Very good info man.
Appreciate it!
Awesome content, thank you
My pleasure!
Great video as usual thanks for sharing ☺️. Keep up the great work 👍.
I appreciate you 👊🏻
Thank you. I'm new to investing but I think understanding the big picture will help me to emotionally handle market fluctuations. Makes sense that selling when low only locks in losses and when you buy in while low, you get in at a better price. If I can guard myself from panic selling, are you saying that the bond index isn't really necessary? I'm 31 and can't say for sure, but I think I'll be fine handling losses and riding out the storm. Can I just forget about bonds for the next 20 years? Also, if I have an IRA and a regular brokerage account, is there any harm in having pretty much the same holdings in both such as 90% VTI, 10% VXUS? I appreciate all the great information!
Thank you for the feedback and question! I of course can't tell you what to do with your money, but I can give you some insight into what I'm doing if that helps. My current plan is to start adding bonds to my portfolio once I'm about 5 years away from retiring/needing the money. Until then I'm planning on holding 85-95% in U.S. stock based index funds (like VTI or VOO) and the rest in a total international index fund (like VXUS).
The only reason I'm comfortable holding 100% stock based funds is that I can handle the potential wild swings that come along with it. If someone can't then it could make sense to add in some bonds even though that move will eat into your returns a little bit. Building a portfolio that you can hold onto during the good and bad times is more important than trying to chase the possibility of a little higher % rate of return.
From a tax efficiency perspective, VTI and VXUS work well in a taxable, tax free, or tax deferred investment account. Technically the best place for VXUS is a taxable account because of the foreign tax credit and technically the best place for VTI is a tax free account. If you don't mind managing the complexity of putting a specific fund in a specific account for maximum tax efficiency then go for it. If that sounds really annoying to you then it's not going to have an enormous negative impact if you just do a 90/10 split in every account to make it simple.
@@JarradMorrowwhat would be some good index funds / ETFs to get ?
Here are my top ETFs and their index fund version czcams.com/video/Gs0KBX1jC7w/video.html
Excellent commentary regarding 2007-8.
I don’t think it’s talked about/appreciated enough. It’s easy to look back and think “oh I can handle that type of downturn”, but it’s completely different actually living through it. The uncertainty was something most people hadn’t experienced before that time
This is a very solid video!
Appreciate it!
Very interesting video. Problem is that these funds are not available outside the US. I'm trying to create something similar for funds available in Europe. More research needed so far.
👍🏻
Hard to resist the temptation of a VGT / VCR / VHT! 🙂
If those fit your investing style, goals, and you understand them then go for it
Love this! ❤️
Glad it was helpful!
Great video thanks!
👍🏻
Do you recommend VTI over VOO? And If I am retired and have nothing in bonds, do you recommend a bit in a total bond fund now?
VTI and VOO are equally great. Don’t know your specific situation so I can’t make that call on bonds for you. When I retire I’ll probably hold some money in bonds. Don’t know how much yet
Love this idea but I’ve never liked the idea of holding bonds personally. I personally don’t care about the stability aspect of it so I just replace it with an income alternative. I use QYLD to replace BND and the yield of the portfolio increases significantly. I understand there are obvious downsides to this but it’s just what I prefer.
I feel the same way as you with bonds. Personally trying to keep an open mind though because I'm sure my opinion will change a little once I'm retired and living off my investments. Glad you found a replacement that works for you. Don't know enough about using a covered call ETF to replace bonds so I'll have to look more into it.
@@JarradMorrow I use it primarily for income because I personally don’t believe in the “4% rule”. The reason for this is that I just don’t want to leaving my retirement up to selling my assets to provide for my later years. A good alternative to what I’m looking at would probably be having a collection of Dividend King companies (Coca-Cola and 3M) to provide reliable returns. But who knows I’m not an expert, I just am very wary of bonds at this point in time.
I agree with you. I got rid of bonds entirely and replaced them with dividend stocks.
@@JarradMorrow I also do this. Replacing bond funds with QYLD (and NUSI). It absolutely increases the average yield. Though it's never been tested in a an extended recession, so guess we'll see when we hit an extended bear market.
Switch to jepi
Liked and subscribed! Great video
Awesome thank you!
I'm learning so much from your content! I found you doing homework on HSA and now I'm in the rabbithole of your vids! Such a gem ...subscribed🔔!! Love your vids & your pup! 🐶💕
Hey Jarrad! I'm a new subscriber and new to investing. I opened a Roth Ira with Fidelity few months ago and I had already met my annual contribution. I just place an order for FXAIX (like $3k). I've been watching some of your videos and I'd love to build my portfolio following your recommendation of the 3 funds, but I'm still very confused (the names and terminology are confusing to me) could you please tell me what other investment should I go for? Like FXAIX and VOO are more of the same? Help!!
i think what you need to look for is a total market index fund, he gave VTSAX or VTI as an example because those are exclusive to Vanguard, i believe.
so, basically, Fidelity’s version of the total market index fund, international, and bond index fund.
edit: he actually puts the three funds there at around the 9:40 mark for Fidelity.
@Jarrad I've been binging your channel for a couple days now. I appreciate how well thought out your material is. I'm a complete beginner and I'm just trying to get my baseline and move forward.
This video was released last year. Would you still hold the same views on the choices you provided?
And two more questions...
What are your thoughts on treasury bonds right now? I hear people talking about buying but I feel like I don't know enough about how the current circumstances affect them now and later.
And last question...
It looks like you mentioned ETFs. Would one also add or consider replacing one of those with something like VFIAX?
They may do the same thing so please forgive me if my question is off a bit. I'm not done binging. LOL
I appreciate the feedback.
1. Yes, I hold the same views about the 3 fund portfolio. One little asterisks is that I personally prefer the 2 fund portfolio while I'm in the accumulation phase of investing. When I get closer to retirement I'll move more towards the 3 fund portfolio mentioned in this video. Here are my thoughts on the 2 fund portfolio czcams.com/video/u7JeoXYG2sE/video.html
2. If you were planning on putting some money into bonds then ibonds are worth taking a look at right now. I don't have any specific content on the topic to send you to right now.
3. VFIAX is fine if you're using the Vanguard investment platform. I have a video breaking down the difference between Index Funds, ETFs, and Mutual Funds that might help you understand my thoughts on it a little better czcams.com/video/xmOMBIBGo0A/video.html
@@JarradMorrow I'm not actually in Vanguard. I'm open to other platforms but it was the only thing I could provide that was leaning more to covering S&P500.
Thank you for your reply - I appreciate your time. I'll check out the videos.
VOO is the ETF version of VFIAX which I'm a big fan of
Thanks, useful.
Your welcome!
Great job!
Thanks!
Hello Jarrad, thanks for the Luck vs Skill article reference . One question though, I read "Bogle on Investing" years ago: If I recall, he firmly believed that owning the S&P 500 and avoiding international was the best approach, which has proven to be the correct approach historically. He didn't like international fund's risk of currency for instance. Now my question, what specifically pushes you into international funds on your recommendation? Great vid by the way, Subscribed.
I believe he answers this starting at about 14:30.
Jack later softened his views on international index funds. He still believed you should overweight US stocks, but he was fine with 10-20% in international.
Depending on what years we're talking, the international market has beaten the US market 50% of the time. It's just been a long 10+ years of the US outperforming international.
@@Excalibur2 Which might mean we are headed for international stocks to take the reigns for the years to come? Maybe?
@@Daniel-od1hq that's the thing, it's been like a decade of underperformance. Surely they have to catch up at some point, you'd think.
Great video, but what about inflation? Especially if bonds give a anual return of 2,5% at the moment and inflation is about 7%. Thats a -4,5% return.
Bonds within a portfolio are there to help smooth out the ride. Yes, at this point they're going to be losing you money, but they're not going to be as volatile as putting that money into a stock based fund. If you're not close to retirement or already in retirement then something like a 2 fund portfolio could be more ideal. That being said, I know people who aren't close to retirement who still want a little bit of money in bonds. While it doesn't make sense, on paper, for a younger person to hold bonds, if that keeps them invested in the market then I don't see an issue with it.
Exceptional explanation.
Thank you so much
Hello Jarrad, thank you for the video, great content. I have a question though, when you calculated the returns, did you consider dividend reinvestment? I was reading a book sometime back and the author made a case for Total US stock market fund. He mentioned that the fund returned close to 9% annually for 40 years, with dividend reinvestment the returns were 11.9%
Yes, dividends were reinvested
Uî
Jarrad.........Absolutely Outstanding Video! You have an incredible way of simplification of the complex. I’m a big Fan. Nicely Done ✅
Glad it helped 👍🏻
This is a game changer. Thanks
Glad it helped!
Amazing video, thank you Jarrad!
Glad you liked it!
If you’re a 30 something millionaire, and are okay with swings, what etf is best for aggro growth for the next 20-25 years?
I have no idea to be honest. If I could see into the future then I’d be a very rich man. Here are my top 5 Vanguard ETF’s if that helps:
czcams.com/video/mSEyghlZchQ/video.html
ARKK. You're welcome.
😂😂😂 good joke
Try QQQ, MTUM, IHI, IXN and AOA. Do your research on each if you can for what you might want. They should peak your interest.
@@StocksIn60Seconds Why ARKK?
Please do a video on the fidelity Blue chip fund and another on the Fidelity semi conductor fund.
Thank you........you do a great job.
Jus getting into the stock market and already learning a few things few you
I like to complicate my portfolio a bit with a Small-Cap Value tilt, which has been shown by Fama/French, historically, to have a risk-adjusted return that outperforms the broad market. But I agree entirely that the average investor would be best off with a simple 3-fund portfolio.
Yup. In my US market portion of my portfolio, I have 70% into VTI and 30% into AVUV to get a good amount of exposure to small cap value
Hey Jarrad, great video! Quick question, do you know if VXUS includes VWO? Trying to minimise the overlap as much as possible. Thanks!
There is some overlap. You can download the prospectus and find out how close they might be.
Stats show most fund managers and stock pickers cannot even outperform the index over time. So I always try to tell myself that and go for the lowest fee index funds.
But it's easy to get roped into thinking manual picks is the way to go - whenever you do have a success with that it feels sooo good.
My bank used to offer an annual talk with a fund guy - and mine gave me a tip for a biotech fund that had a massive surge the next year. I LOVED the feeling. But then had to remind myself I don't know shit about biotech and go back and look at stats which show almost no one can beat the index over time, so I sold it and went back to my index funds.
Did you inflation adjust your Chipotle burrito analogy 😂. Love the videos!
😂
I really appreciate your video... I currently have a a multiple fund strategy of 7 funds, Aprox 65% is split between VTI and VOO (US total market and S&P) with the remaining 35% split somewhat equally between VB, VDE, VT, VTV and VYM. I appreciate that there is some overlap in these choices. I'd like to simplify but don't know how to do that without loosing exposure to these areas!
Hello Boo Beto, how come you don't have SPY as part of your portfolio?
@@theoneed2051 SPY and VOO both track the S&P500, they're very similar funds. VOO does have a lower expense ratio at 0.03%.
If you hold VTI, you hold the stocks in all the other funds you listed.
@@rogerdoger9939 what if I have vtsax index fund
@@lpacino8241 I don't understand your question.
the general "rule" is to take your age and invest that percentage into a bond fund. Take the rest and put 90 per cent into US stocks, 10 percent into international stocks. Re balance it on your birthday. Simple and low stress. Go to the library and read "Modern Portfolio Management" .
To go for this I would have to have been born yesterday so I'll stick with 0% bonds.
No crypto? You should check it out
With the increase in multinationals, there's data that suggests you can minimize your direct holding of international indexes/funds. The world is avery crazy place right now, but essentially you can get similar international exposure by investing in the spy index due to many of these companies global presence, with a lower sharpe ratio than adding most international indexes (historically). Just to be totally transparent, I work in credit analysis covering hedge funds but I'm not an invest advisor. And past risk-adjusted performance isn't necessarily indicative of pro forma returns. In any case, the general advice is always to invest based on your objectives and risk tolerance
@@garrettwilliams6908 that’s a very solid point. Well worth considering. Thank you.
Great advice...
👍🏻
Dude, you said wait for it and didn't make me wait AT ALL. Now I have to go wait for something - I was so ready.
😂
I have been using 60/30/10 VTSAX/VTIAX/VBTLX for years, although lately I've been allocating some of my bonds to the I Bonds. Can't beat 9.6% guaranteed.
That 9.6% definitely helps protect some of your money 👍🏻
Andrew Have you done well with this mix?
@@georgialee6755 it depends what you mean. Over the last ten years, I would have done better to be 100% US Stocks. Over the last two years, I would have done better to own no stocks. But you just never know. I've done ok, but it's really a get rich slowly kind of thing.
Thank you Andrew!
What made you choose mutual index over ETF?
That draw down only matters if you sell at the depressed rate. Otherwise its meaningless.
I agree that it only matters if you sell. But I disagree that it’s meaningless. Most people under the age of 40 have never seen a depressed market (that was under water for multiple years) like what happened in 2008 so I think it’s important to point out how ugly it can get. You might be emotionally better prepared for times like that, but there’s a ton of investors who aren’t and would panic sell at the worst times possible
i would not use the bond fund but you are on the right track
Bonds aren't for everyone, especially when you're very far from needing the money. I prefer the 2 fund portfolio then eventually transitioning into a 3 fund portfolio as you get older
Amazing clarity
You don't need to hold EVERY stock in the market, the top 100 or 500 work just as well.
In the video I mentioned how you could swap a total market fund for an S&P 500 fund. Do whatever works for you and your investing style/goals
Using the monte carlo simulator on portfolio visualizer bears out your claims about this portfolio. Even against other big time investor portfolios like Ray Dalio's portfolio this one does better. Question is this: Do you feel like this portfolio will continue to produce these kind of returns given the current market dynamics? Bonds are in a weird place, and not yielding much, and the global economy seems more inter-related than ever.
I had a same question going through my head. If some one can shed some light in view of current market threats
Hi Jarrad! So talking about VTI, VXUS and BND, what is the percentage range of money that you would recommend on each of those? I'm new to ETFs so I don't know which ones are the 0% stock 100% bond or so, could you give me a hint please?
VFIAX and VGT all Vanguard.. thinking of adding VNQ.. Generally, REITs tend to do well in times of inflation, just because of their ability to increase rents and then pass that income on to shareholders”
Yes, I'm these two plus VEMAX
I'm in VFIAX in my 401(k) and HSA because it is the only low-cost Vanguard option available in either. BUT 3% return after MANY years?? Not all that enticing.
@@djmerchant VFIAX has returned way more than 3%
Hi Jarrad. I found this video to be extremely helpful and encouraged me to watch more of your videos. I am confused on 1 thing. Are you saying Vanguard is not a good place to invest money in?
Their investment options are the best, but their investing platform is trash (in my opinion)
@@JarradMorrow do you like wealthfront? I've heard good things about that one
@@JarradMorrow I have Tda and Vanguard accounts. To me it is clear that Vanguard's basic platform is kept that way on purpose to repel investors prone to active trading. I actually like their platform for that reason.
I understand their reasoning 👍🏻
You're right - appreciate your voice of reason!
My pleasure!
My IRA is 100% in VT. So simple - love it.
Too much international allocation in VT for my liking. Glad it fits your investing goals though 👍🏻
Better to out in in just one fund SCHD. Three year average returns are 24%
Why? Are you older looking for the immediate income from dividends?
3 years is a very short period to judge returns. I hold schd but 3 yr return is not why.
When the market crashes, you should put even more money in! March 2009 was the bottom of the big crash. Any money you put it at the bottom quickly doubled in value. Think of this way: when the market is down, think of how many more shares you money is buying. When the market is up, think about how much money you've made.
Well said
@@JarradMorrow Lord Rothschild famously said--The time to buy is when the blood is running in the gutters
👍🏻
Very good video !! I love your Tshirt. Where to buy ?
Thanks! I think I got it on Amazon
So funny I listen to your dark swan moments and we are in it now. Still fully investing monthly. Do love your idea on all three. I’ve committed to total U.S. but have thought about same strategy. Glad you confirmed it.
I’m actually going with:
Total us 70
International 15
Bond 15
Yep, we sure are in it right now 😂. When I put this video out the stock market was absolutely ripping so it was a very unpopular view at the time. Nice job staying the course. We should see a few more times like now over the next 50 years so just continue to stay the course
Balls deep VTI 100%
Haha me too!
Jarrad: Just discovered your channel. This video was excellent, because it does show how simple investing can be. This is clearly a solid approach for most investors. I wish I started this way. But, one would think that, if they take this approach, this is only video one needs to watch. Ideally, this video should have been the end of your CZcams channel. Fortunately for you, most people won't take this solid advice. It's too simple and just not exciting for many retail investors. As you said an investor can personalize the three ETF approach, if they need more investment thrills....