3 Fund Portfolio - The #1 Investment Portfolio
Вставка
- Опубліковано 18 чер 2024
- The 3-fund portfolio is a simple, low-cost way to invest your money. In this video, I'll share the basics of how this investment strategy works and why it's so effective.
Timecodes:
0:00 - Intro
1:13 - Introducing The Three Fund Portfolio
2:19 - Why Total Market Index Fund
3:25 - Mitigate Individual Stock Risk
4:28 - Cuts Out Unhelpful Advisors
5:53 - Low Costs
7:21 - Simple
8:32 - Building Your 3-Fund Portfolio
10:10 - Asset Allocation
------------
FAVORITE TOOLS:
► Mint Mobile - Check Out My Partner Mint Mobile, Affordable Phone Service - trymintmobile.com/financialto...
► SoFi - Checking & High-Yield Savings Account (Terms Apply) - sofi.com/tae (Affiliate Link)
► Shortform - More Than Book Summaries - shortform.com/taekim
LINKS:
► Get My Weekly Newsletters: www.financialtortoise.com/new...
► Favorite Books: www.financialtortoise.com/bes...
DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.
I have a 3 fund portfolio but I have finally decided to invest in ETFs, alongside. I’m looking at SCHD, VOO, XLK or SCHG.
Great picks! I like XLK and SCHD equally!
@@VanillaCherryBreadthank you! Actually would it be silly to have both?
Not necessarily though there is a fair amount of overlap but that’s not necessarily a negative. Having a diverse portfolio is KEY; that being said my initial deposit of 90K has grown to over $650K in only just ten months :)
Congratulations!! I lost a lot chasing individual stocks and I feel pretty stupid for not understanding how investing works. I have a double major in economics but I’ve been trying to make sense of the market.
You’ll find out one day that level of education doesn’t matter as much as practical experience in the markets. If education mattered we’d all be in finance with phds 😂
This video should be required viewing for all high school and new college graduates.
Amen!! Knowledge is power.
An extremely important video as I go through my financial learning journey. Thanks man.
I did this. Retired with $5.5 M.
Listened to Bob Brinker before he retired
Right now, I sold early 2022.
T-Bill and Chill
Extending to mid-term Bonds
Taking less risk
But may re-enter equities if the US Gov. massive debt leads to a melt down in equity mkt.
This is becoming one of my favorite channels! Thank you for the information and keeping it simple.
This is the second video of yours I watched and I really enjoy your financial content!
Wonderful, as usual! I love how thorough you are in your explanations. I hadn’t realized that the 3-fund portfolio ensures you don’t have overlap between the 3 funds.
I cannot figure out why you don’t already have at least 100K subscribers. Doin, I’m sure!
I set up a 3 fund portfolio in my 401k and my investment account, this is my long-term plan. Love the way you explain things and make it very easy to relate.
Tae, this is a wonderful video. I do really appreciate your time and efforts you put on every single video. This is a must watch video.
I love your idea of consulting Vanguard target date funds. Why didn't I think of that? Thanks for your videos!
Excellent advice and I appreciate your honesty! Also, 100% agree with your thoughts on financial advisors. I have many, many friends who have used simple portfolio strategies very similar to the one you have recommended - and their returns have actually exceeded what I earned with my financial advisor. The more I have learned about the market and investing, the more I understand that simplicity is our friend.
Thanks for the tip. It really going to help me.
I just visited a wealth advisor today, you basically provided the same information he did in terms of % of asset allocation. Equities, bonds and international equities... obviously they provided more granular information but i really like how you confirmed things in this video.
Thanks man. U just saved me a big cost
Awesome information! Thank you for making this video!
Great presentation . Thank you !
Excelent video! I am 20 and i am from Portugal, and we don’t have access to us funds so i just stick with an world etf (Vanguard ftse all world) and will start implementing 1% of bonds every year when i’ll have 25 to when i’ll have 65 have a 60/40 portfolio
Great channel! Appreciate you.
Tae, Thanks for great,clear,video.
Tae. Thank you for answering my question: Work w an investment advisor or DIY? I’m probably not going to anymore after hearing your tips.
Awesome video, I have been following this trend for several years and it works along with patience and education. I also manage my own portfolios! It’s relatively simple!
Good stuff!
The total international index fund seems to be for "diversification for diversification sake". VXUS for example, has underperformed VTI and VOO for the past 20 plus years... Just go Buffett style and skip the international and stick to VTI or VOO.
it's amazing how valuable your content is, while being simple to understand.
Is investing in the stock market available for everybody. Me for instance, I am from Burkina Faso, studying in Morocco. Can I invest in the VOO ETF?
My future self thanks you for making this video
I’m doing just 2 for now … young - doing 80/20 - fid 500 index and fid 2065 retirement fund (mix of stocks / bonds / intl) …
This is a great strategy. Since this video was released what has been the return?
Great channel and vids. But surely with interest rates being where they are, and looking to stay high for some time, there is a good argument against having any bonds in a portfolio? comments/thoughts?
Great video. The popping sound is 100% not needed though. Keep up the good work!
My 3 fund portfolio SCHD, QQQ, JEPI. Should outperform yours by a big margin.
A benefit of owning the mutual fund version of an index fund is sometimes the fees are less than the ETF. The ETF will be more tax efficient, but this doesn't mean anything in a tax-advantaged account. Also, if you make monthly contributions to your account, several of the major brokerages let you setup automatic investments into mutual funds at your preferred allocations. They won't do this for ETFs because ETFs trade throughout with some volatility while mutual funds are only traded at the end of the day. The point is ETFs aren't always better than mutual funds.
Benefit of ETF is selling covered calls
Thank you
Great video and new sub! I'm 28 and just started my RRSP about a year ago and only use Vanguard myself, I'm canadian so I'm holding VCN, VFV, VIU, and VEE for global equity exposure, does this sound proper? I will be looking into some of vanguards canadian bond options, however when i look into that 10-20% in fixed income/bonds, should i be looking moreso into canadian/US bonds, or is there an equal weight bond etf? Thanks in advance!
Hello Tae, which GOLD or metals mutual fund do you recommend? Either with Fidelity or Vanguard. By the way, I luv you 3-Fund strategy ❤! I'm 54yrs old, can you please tell me how I should allocate the 3 Fund mutual funds? Thank you 😊 in advance
Do you include fiduciary’s in your opinions on advisors?
So the etf equivalents dont have a minimum requiremnt but I dont think u can auto invest or make auto investments into etfs at VG. Also, did you say how you allocate USA vs international. Would that be 50/50.? What do u recommend there? Maybe i missed it. Oh there it is..ok. got it... 20% intl or more or less. And rebalance! Yep. Good stuff. Great vid.
Great Video
Thanks for the simple explanation! I use s&p 500 index fund with fidelity. They have a lot of same holdings as the total index fund. Be careful with some of these small investment companies not sure if they will be around 20 years from now.
Do you recommend the fidelity’s s&p 500 index fund? I am thinking of doing that one, along with bonds,
Why does the ETF's have a lower cost? aren't they doing the exact thing? What are the pros and cons between a regular fund and an ETF?
You have Coolly explained, Dude 👍
Glad you think so!
What do you think of the target date Vanguard funds like the VFIFX? These have a slightly higher expense ratio but seem to be less to pay attention to.
Something to keep in mind about bond funds: they are not especially safe. I know a lady near retirement whose portfolio is down 7% over the last 5-10 years because her financial advisor had her mostly in bond funds that tanked because of inflation and rising interest rates (they also had annual maintenance fees of about 1%). She'd thought her savings were safe and growing.
Could you swap out the bonds for a company 401k/pension plan?
How does asset placement (which funds go into which kinds of accounts) fit into this mix? Trying to figure out tax efficiency across Roth IRA, 401k (trad+roth), inherited IRA, and taxable accounts works.
Great!!!
Are you trading these in a taxable brokerage account or Roth? I like the liquidity of the brokerage account
Excellent content 👌
Thank you 🙌
I am currently invested in the following funds SWPPX, SWTSX, SWAGX, and SWSSX is this to much and do I have an overlap? What would you recommend and whats a good allocation?
Great video as usual
Glad you enjoyed it
Great video! May I ask why I should consider an index fund if the expense ratio of a similar ETF is less?
You cant go wrong with the mutual fund, or Etf version
Did you see different returns on Fidelity & Vanguard or were they the same?
Does it make sense to buy Vanguard funds through TDAmeritrade?
Great content 👍
Thank you 🙌
What is IRR for this 3 funds strategy, say, over the last 10-30 years?
VXUS over 10 years. What's the return? (Bad) Fund overlap needs to be recognized, so you might be unknowingly investing 50% in Apple. Make sure that you are comfortable with the weightings
How's the performance over the years with this methodology
I'm going to set up a 3 fund portfolio in my Roth IRA and I am super excited for it. One change I will make though is instead of investing in a bond fund I will be allocating my money towards investing in REITS as I believe getting exposure to Real Estate is a good idea and since I am incredibly young it doesn't make sense right now to invest a lot of money into bonds
Lol Incredibly young
No bonds in the Roth. Ever. It’s for long term growth
So, if youre managing yourself, as you get close to retirement you would just reallocate to total bond index?
thanks
Welcome!
Great video, thanks. I'm curious about a couple of things. I have a Fidelity 401k and a Roth IRA account, and the Vanguard funds are available to me. I'm wondering why they weren't available to your Fidelity 401k.
Also, you said the closest you could find to a total market index on Fidelity was FXAIX, but I found FCFMX, FSKAX and others. Were those not available to you, or did you exclude them based on their relatively low Morningstar rating, or something else?
Mutual fund companies offer packages of funds to 401K plans. Its not fair, but the bigger the company, the more clout they have and the more choices they get. Small companies are just not given many choices of funds.
@@nickv4073 I see, thank you.
So even market it dips 20 or 30 or 40 % in a given year as long as we stay in and don't sell at a loss the it would recover or just pick up in the next years right as long as the fund does not close down or file bankruptcy then there should be no issue there, wouldn't you agree
can you do a vanguard tutorial on how to buy index fund on their website ? and set up automative investing, i am having hard time navigating the vanguard website, i think a lot of people would be very appreciative of this if you actually show us how to do it
If you call Vanguard, they'll walk you through the process of setting up an account. They ask you the questions, fill out the info on their end, then you log in to confirm the info is correct and sign.
Why did you also show their ETF's equivalent are you saying that if the Index is not available we could go for the ETf's etc. just clarifying thanks
If you absolutely hate Vanguard because of specific reasons, and you don't want to use them, what would be some other portfolio?
Thanks. Did you get a Vanguard account yet? 30k views you would think they would give you one.
My summary
US stocks VTSAX
VTI is eq ETF
International stocks VTIAX
VXUS is eq ETF
Bond VBTLX
BND is eq ETF
Asset allocation your choice, but as an example
35% in bonds
20% of stocks in international
What is an equivalent bond fund at Fidelity?
I use m1 finance and for the past couple years doing 67% vti, 23% vxus, 10% bnd. Just turned 40 so may eventually increase the bnd, but glad to see this is still close to what is recommended. Obviously 2022 kicked my butt, but I keep my weekly automatic deposits into this pie and have faith it will be good in 15-20 years.
Thoughts?
Trade in your bonds for Berkshire Hathaway you can thank me later
@@davidbrooks8809 What is that?
i thought with ETFs ..You Can Not set up automatic investments?
@@davidbrooks8809 Could you expound on this? I am very curious because I love Charlie and Warren, But don't know enough about investing yet to understand how trading in Bonds for BH would be a good idea.
You'll never get hurt, unless you jump off the roller coaster. Keep investing my friend 👍
VTIAX equivelant for UK investors Please?
Great video!
Thank you for the fantastic content. Once a 3 fund portfolio is set up, with say Fidelity, is it possible to switch which index funds the portfolio contains? If so, is there any penalty or charge for making these changes and is changing a portfolio's index funds something people often do?
If in a taxable account, yes, you'll pay taxes on the gains. If in a tax advantaged account (Roth IRA), then no. It could also depend though on your brokerage firm and their own policies.
1 fund? Target date index would effectively do this 3 fund automatically for you, right?
Tae, I am a 60 yo self employed man who started late with retirement savings. Currently, I have $250K on 3 IRAs. Which investment fund strategy would you recommend to someone like me? Have you made a video on this?
What are your thoughts on a US total market index like VTSAX already having international companies within it; aka JL Collins Simple path.
Would you recommend using this method managing your money when you retire…just changing the allocation breakdown?
I don't see why not. As he said at the end of the video be aware of your allocation and risk tolerance. I've heard that it is best to not dip below a 50/50 Stock/Bond allocation even in retirement otherwise you will probably not be able to keep up with inflation.
My portfolio is with Vanguard. I have a Roth IRA, and a non-retirement account where I invest once I hit the annual max on the Roth. To date, I'm all in on VTSAX. If I opt to add VBTLX as you suggest, does it matter whether I hold VBTLX in the Roth, or the non-retirement account? Specifically, I'm wondering if VBTLX creates periodic taxable events. If so, I'm thinking I'd be better off holding VBTLX in the Roth? Thanks, TK!
Same bro
They will both create taxable events. The general rule is you keep the potentially higher earning assets (stocks) in the Roth because in the end you will pay much less taxes.
You don't pay taxes on invstment in a Roth Account...convert all Ira money as soon as possible to a Roth for that reason. Zero tax on all money in the roth!
Always max your ira first
Why not turn it into a two fund by getting a total market fund and not have to worry about balancing the ration between US and Intl stocks?
To execute this strategy (which sounds really good), do you invest directly with Vanguard or use a platform like M1 Finance which many on UA-cam tout?
Hi. I personally like to invest directly with Vanguard but you also can't wrong with using a 3rd party platform. Just make sure to check if there are any hidden fees.
@@TaeKimFinancialTortoise Thank you for your quick response. I was leaning towards Vanguard as well since I was going to choose all Vanguard ETFs instead of the corresponding Index Funds. Can you purchase fractional shares of the Vanguard ETFs on the Vanguard Platform? I was told you could not (at least you could not in the past). Thank you for the great information on this channel. I plan to tell my sons (both in their 20s) to look at your channel!
Found it - You can only buy full ETF shares - no fractional shares. So, you can't invest $500/month and let the platform figure out the real percentage, you have to base your investment on the price per share for that $500. That is okay, but in my research, M1 Finance lets you purchase fractional shares of an ETF. $500 today on Vanguard assume 60/20/20 - 1 share of VTI, 1 share of VXUS, and 1 share; on M1 Finance assume 60/20/20 - 1.45 shares of VTI, 1.87 shares of VXUS, and 1.29 shares of BND. The majority of the money would be invested and a small remainder if any in the settlement account. My Vanguard settlement account would be $163.81 which is not invested and would be added to next month for the next dollar cost average event. I think my math is correct. Today's prices - VTI - $205.77, VXUS - $53.34, BND - $77.08 for the example. With today's prices, I would have to $337 to get at least one share of each. What if I only could afford $200/month to dollar cost average? I would have to pick and choose - not ideal. Just a thought.
How about drawing it down in retirement)
How do you do asset allocation with something like a Roth IRA, which has a contribution limit? What if you contribute the maximum amount early in the year, and then the allocation becomes offset later in the year? Is there nothing you can do about it?
Rebalance at the time of funding the Roth IRA if the allocation is out of balance. Dont worry if it is out of balance in rest of the year.
Rebalance at the time of funding the Roth IRA if the allocation is out of balance. Dont worry if it is out of balance in rest of the year.
My current 3 Fund portfolio is SOXL, NVDL and SMCI. All in AI!😂
Are you worried about being too exposed to a single investment bank? What if there's another Bear Stearns or Lehman Brothers?
Hi Tae, thanks for sharing. Such a great content. I live in UK. Would you kindly tell me which funds in Europe could be a decent option for your VTSAX or VTI, your VTIAX or VXUS and your VBTLX? Thank you in advance. Much appreciated
Perhaps use International Brokers?
Is there an app where you can invest in all of the stocks of Vanguard, even if youre in Europe?
Hi there, yes there is. Interactive Brokers gives you access to all the Vanguard ETF‘s and Mutual Funds.
I live in the Caribbean I how can I invest
Does this plan work if you're 59 and retiring at 62?
Anyone know how Roth’s are taxed? Is it by each paycheck or do you get the tax bill at end of year ?
Roth IRA accounts are funded with your after tax money from your income, so you don't pay taxes...ever. The government is helping you save for retirement by allowing your profits to grow tax free.
It’s the start of 2023 and I’d like to rebalance my portfolio which is comprised of various tech stocks and index funds into a simpler 2 fund portfolio-Total market and bonds. But 2022 was horrible. I’ve lost like 25% of portfolio value. Rebalancing requires me to sell positions at this loss. Should I still rebalance? I’m 62 yrs old.
He has a video that said you can write off any loss up to $3k per year and carry forward anything left over to future years. I have no idea if this helps you out. Talk to your accountant?
You would rebalance by purchasing more stocks or bonds accordingly not selling off. If you can't do that then hold everything until you can buy more. Avoid locking in your losses by selling. The so called tax benefits by claiming capital losses sucks compared to a buy and hold strategy with index funds.
Hi Tae! I know this video is old, but maybe you'll see this. Is there any reason I, as a 22-year-old, should not just put everything into an S&P 500/Total Stock Index fund? I feel that a % of my portfolio being eaten up by low returns from bonds is an inefficient use of my investing dollars. If so, what age would you recommend I start buying shares of a total bond market index fund? Thank you!
Bonds are for pre retirement, so you don't lose it all in bear markets right as you quit working.
Rule of thumb is the "120 minus age" in stocks. At 22yrs old, 120 minus 22 equals 98% in stocks.
Do stocks esp total or s&p index funds. Just stay in and keep saving! Rethink bonds maybe in 20 or so years.
VOO over VTI, SCHD over BND and than add some QQQM or VGT, or FTEC, at least for the current climate. My VMFXX will outperform BND until interest rates change...if ever.
VGT?
Yes, +30% on recent buys, +60% on older ones....@@Jack51971
Very smart. I have a similar set up. 40% SCHD, 40% VWENX, 20% Variable Allocation (QQQ/International/GLD). The variable allocation can change based on relative strength. Right now it is QQQ and GLD. Beginning with a 20%+ pullbacks, I replace some VWENX with VOO. The deeper the pullback, the more VWENX that gets replaced with VOO. I flip all VOO back to VWENX down the road and wait for the next pullback.
Soooo scared but once i get the hang of it 💵.
Any advice for over 60 sitting on cash( lots!!)?
VGT and why? Look around...everyone on a cell phone...computers...AI.....😊
Is .71 % too high of an expense ratio? Adding FSHCX would add some stability to my IRA, but it seems pricy.
Looks like that fund outperformed the s&p. It might serve you well if you don't mind the health sector
.71% is not bad, Voya is my work sponsor and their portfolio fees are outrageously high.
I'm starting to form a 3-fund portfolio but really wondering if it's worth investing in bonds. I'm still fairly young (32) and it doesn't seem that long-term there's a lot of returns with them but they've been a staple for portfolios. Have they become outdated?
that's what I'm wondering.
Do you even yields bro?
It depends on your risk tolerance level at your age. You can have 2 or 3 % in bond for now and add more to your portfolio once you grow your portfolio and are past 40+ years old. If your investment portfolio is worth a lot already, you might want to put more towards bonds to lock in the value but you may prefer still leaving most in stocks if you believe that you can grow the value as you are still young. It all depends on you. I say consult a financial advisor. Make sure to not let them sign you up to pay for unnecessary fees. Good luck!
I'm looking for long term investment. If I have invested $1000 in BND in 2007, the current value as of 2022 would still be under $1000. Is it a right step to include this in the portfolio? What am I missing?
I understand that bonds bring stability to your portfolio, but from what I've seen total international funds don't have as high returns as the total US stock market funds, so why would you not just get a total market fund and a total bond fund and just balance those two? The bonds can bring the same stability as the international fund and the total market fund will bring more returns.
What do you do when you're retired and have the nest egg but are tired of paying institutional costs
How often would you rebalance the portfolio?
He suggested once a year
THIS INDEX RECOMMENDATION STILL HOLD UP TODAY?
Oh, please - those pop up sounds are deafening on my headphones. And I get enough sllerts whilst trying to watch you videos.
Hey, but thanks for the interesting video.
@TaeKimFinancialTortoise
Why Vanguard over Fidelity or Schwab if their expense ratios are lower?
Thanks for the confidence building videos!
I've been investing in fidelity since I started mutual fund investing over 20 years ago I don't think you can go wrong with Fidelity or Vanguard if the expenses are lower go with that
I would never invest in anything international or any bonds... they go up and down just like the s&p, but they will never have a decent return, most won't even keep up with inflation. A HYSA gives you a better return than return than bonds/international.
Did anyone else notice that the expense ratio in each case was cheaper with the ETF?