I currently have 75% SCHD and 25% SCHG Roth IRA. Brokerage account is SCHD, VOO, VUG, alongside some individual stocks! Just passed 500K from an initial 65K startup last year. I am 43 and I plan on working until 50 hope to be at ~$1M soon enough
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. Well done on profits!
Nice. I'm doing some research on VOO & SCHD now, seems like very solid choices. Congrats on nearing retirement. 7 years will fly.....unless of course you hate your job lol....
Love my job. Over 25 years as a mechanic for a Major Airline. Great company. Just wish I knew about stocks, index funds, growth/dividend paying ETFs years ago. But still with a good CFA I am doing great. It's a nice hands-off way to approach it. Lina Dineikiene manages my funds and she has a great team. I conservatively follow her recommendations and market entry and exit points, and tbh this system makes it possible for me.
You have one of the very best finance and investing channels on UA-cam and deserve way more subscribers. So sick of all the finance bros! You’re a breath of fresh air
Hi Rob, I’m coming to this video in the middle of the night as I watch over my newborn son. I’ve been thinking a lot about the future and seeing your deep dive and the thought process behind your choices is amazing. Thank you for taking the time to walk us through this and to provide the links as additional guidance. This is all amazing stuff! You’ve got a whole new subscriber!
Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 23 months and l've accumulated over $70K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.
Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look.
@@jamescomb1170 I completely agree. I have been consistent with my profit regardless of the market conditions. I got into the market early in 2019 and the constant downtrends and losses discouraged me, so I sold off. I got back in December 2020 and this time with guidance from an investment adviser who was recommended by a colleague
Rob I want to thank you. I just discovered you a few weeks ago. I pulled my money from my financial guy who gave me an over complicated portfolio. I’m going solo and slimming down to your simple 3 fund portfolio. I hope you keep doing what you’re doing-A mitzvah for your followers! I am beyond grateful. I have learned so much.
True. If I had to choose just one fund to invest forever it would be Berkshire Hathaway. And to lose weight buy a commercial versaclimber. Done and done.
Great video, about one year ago I moved my investments over to Vanguard. The Edward Jones advisor had me in 9 different funds averaging over a 1 percent expense ratio and all were front load fees. Now I am in 4 different funds and I am saving on fees and have the extra working for me not going to the advisor.
I just posted up the last comment with asset allocation. Question...what do you think of bonds at this time? They seem worthless, especially with the threat of inflation now a days...thoughts?
been using M1 for a couple months now and definitely enjoying it. There is a rebalance feature but one thing to keep in mind this will create a taxable event. If you just adjust the percentages you want in each ticker it will eventually balance itself as you invest money into it without creating a taxable event. Amazing feature!
I thoroughly enjoyed this video. I wish I had been taught this back when I started investing. Thank you for taking the time to explain this investing approach clearly. The tempo, tone and graphics of your delivery are perfect. There is no fluff or unnecessary information. You now have a new subscriber.
I did some sensitivity testing using Portfolio Visualizer on the Bogle Three Fund portfolio. Turns out that while the Mid Cap Value Index has a lower return than Small Cap Value, it also has a substantially lower standard deviation. So instead of having 40/10 Total Market/Small Cap Value mix and going for 30/20 Total Market/Mid Cap Value mix you can have a higher CAGR and a lower standard deviation. In fact, it's the same StDev as only investing in the Total Market for US stocks with a better Best Year (not surprising) and a better Worst Year.
Excellent presentation. I am planning on retiring from Federal service in 2022, keeping 5 years of expenses in the TSP G Fund and rolling the rest into an IRA. You’ve given me much “food for thought”.
That is such a great plan. It's tough to set aside funds to earn peanuts when the market is roaring. I know you wrote this a year ago (before the market decline). One of THE biggest risks to a retiree's portfolio is a significant loss at the onset of retirement because the funds can't "grow" back if you have to spend them. If you carved out 5 years worth of expenses and put them in the G fund prior to retiring and prior to the worst start to a year for a 60/40 portfolio ever, you were able to mitigate one of the biggest retirement planning risks. Did you execute your strategy?
@@seetheforestthroughthetreesI apologize for not getting back sooner with an update. I retired May 31, 2022. I actually changed my original plan a bit. Since I have a pension that more than covers expenses, I don’t need to have 5 years in the G Fund. Actually, I’m more aggressive so I have 20% G and 80% in Schwab’s S&P index SWPPX. I don’t plan on making any withdrawals until I turn 62 (in 2 years) and that amount will be approximately 3.3% of my balance. So far so good. I’m up about 16% overall since retiring. Thanks.
Great video! I have a 3 fund portfolio with Schwab: SWPPX-S&P 500, SWMCX-US MID-CAPS and SWSSX- SMALL-CAPS. I just have it automated where monthly I contribute equal amount to each index.
long term returns of VTI is same as VOO+VXF. Last year VXF did well and many will tend to use small caps. For simplicity VTI+VXUS+BND is just fine.. sometimes I feel VUG+VXUS+BND is fine
I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio of $450k dwindle away is such an eye -sore.
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I would recommend doing EXACTLY what this video suggests. Just decide your ratio depending on your age. Keep doing it monthly and don't worry about what the numbers do in the short term. It's your best bet to long term growth
Very helpful for a single woman who is starting to invest in her children's future. I will recommend your channel to others. I love the page "portfolio visualizer".
You should do a book review of J.L. Collin's The Simple Path to Wealth. In it he distinguishes between investing when you are employed and when you no longer work. During the growth phase, he advocates putting everything in a stock index fund that tracks the S&P, which he points out has significant international exposure because so many of the S&P companies are international. During the preservation stage, he sees a place for bond to reduce volatility when regular contributions to one's retirement plans are no longer being made.
I read his book years ago. A review is a good idea. The problem with a 100% stock portfolio is that it can underperform say a 90/10 portfolio over a very long time period. That said, we are in unchartered waters with the current bond market.
I should add that I agree that the S&P 500 companies operate throughout the world. However, I see no reason to ignore 85% of the GDP in the world. Yes, the U.S. has been the dominant economy since WWII, but should we make a bet that it will continue in that role for the next 50 years?
I have always run 85% total market mutual funds and 15% bonds. I can tell ya after 20 years of investing I wish I would have had 0% bonds . leaving gains on the table. I would have used a dividend reinvestment fund instead if I knew any better.
@@somchai9033 that has been possible only because bond yields - and inflation in the overall economy - have generally been declining for the last 20 years. This will not be possible to continue going forward.
In a growing economy with almost no inflation (maybe some deflation), equities do very well and outperform bonds. I recommend to check growth and price trends to understand in which environment you are and to balance accordingly. There is no perfect ratio of bond/equity, it is changeable based on the two above conditions.
I'm 41 years old. 100% in either SWPPX or Fidelity 500. Over 600k of it in my retirement account. Plan to do so until at least 55. However, I do have a retirement plan that I coinvest with my employer which I cannot move unfortunately. Regardless of one's age and the amount of money at stake, can't see why someone would have more than 6-7 years worth of living money in bonds....
Just found your channel yesterday, your videos are so helpful to a newer investor in 50’s. Would love some more videos on getting started late to investing:) Thank you!
Can you do a video or offer advise to someone who has already retired but does not plan on making any withdrawls for another 10 to 15 years with no more money going in to the plan? Can you point me in the right direction? I just ran into your videos and really enjoy the information and presentation.
This guy is correct imho. The lower the number of funds (or in my case investment trusts) the better, although i would have 4 as a minimum and 8 as a maximum. It is also a lot easier to get in when prices are low after corrections, crashes etc. Also, for this reason don't forget to hold some cash.
Very nice. Have been a Vanguard boglehead for decades. Would have been very helpful if you compared the n-fund portfolios in Portfolio Visualizer and explained the difference in standard deviation and sharpe ratio between them. The risk adjusted returns is a big reason to build out the portfolio as you have done with asset classes known to reduce risk due to how much correlation there is between them. Really good stuff though. Enjoy watching your videos and well done explanations.
Vanguard Wellington fund and Vanguard Wellesley Income (50/50) crushes the 3 fund portfolio with 5% less volatility. All without the need to ever rebalance. Also generates 4x as much income as the 3-fund portfolio.
What are you basing this on? The Wellington fund is not even 4 years old yet (inception November 2017). So you are basing their returns of this fund only 4 years of data?! Also, the expense ratio of the Wellington fund is about 8.5 time higher than the Vanguard total stock market index fund-0.34% for Wellington vs 0.04% for VTSAX! This will eat away at your personal return year after year. Please show your data comparing portfolio returns on $10k for 1, 3, 5, 10 years and longer (which unfortunately you can’t with such a young fund) and account for the drag of the extra expense ratio. Show *with data* that your 50:50 split *crushes* the three fund portfolio, please. I would love to be convinced… I’d love to see the side by side comparison of your 50:50 vs Rob’s 50:30:20 in terms of personal return. Short term and long term.
@@stephanien6237 the Wellington I believe is one of if not the oldest funds around. There is data going back to the 1920’s. I would like to hear Rob’s opinion on those funds.
@@rob_berger The biggest thing that confuses me when investing for the long haul is why you need to be diversified at all. Why would anyone need anything other than one good total market index fund? I mean, let's compare 2 funds, one is 100% SWTSX and the other one is 80% SWTSX and 20% Bonds. OK, so the market goes down 30%, how does that help the fund with 20% bonds? Sure, fund number 2 with 20% bonds doesn't go down as much, but if you're investing for the long term, you're not gonna touch that money anyway, right? And that means you're gonna miss out on lots of upside growth when the market recovers if you've got 20% bonds, right? Is it just a matter of helping people sleep at night? Or something else? What am I missing?
Best video I’ve seen that breaks down the 3 fund/ETF portfolio. Just sent to our 3 kids - 1 in high school, 1 in college and 1 about to graduate college. Fingers crossed they follow the advise. We have Schwab and TSP accounts - wish they had a one button rebalance option as well. Great feature in M1 Finance. Thanks for the insightful videos
Biggest lesson i learnt in 2023 in the stock market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.
Nobody knows anything; You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.
Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
“NICOLE ANASTASIA PLUMLEE’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Great video. Thank you for taking the time to put this together. I've been torn on should I buy the top ten large cap stocks or go with an ETF. The diversification a ETF/Mutual can provide is unbeatable and in today's world cheep too.
I'm in Canada with some USD in a tax-deferred account... wasn't sure how to deploy my cash but this video helps! Thanks again Rob, really appreciate your pragmatic and detailed explanation to deploy a logical (and very simple) strategy. Keep up the great work, you are doing a good service.
Excellent video. I look forward to every new video. I am early in retirement, and now wish I have taken a similar approach to the one shown in this video. I have several brokerage accounts. I have ended up with too many individual investments. I use a spreadsheet to keep track of it all. My best returns have come from simple broad funds that are left alone. My main uncertainty these days is allocation of bonds in low yield and rising rate environment. Thanks again for your great work.
Hello, I’m interested in moving money from my tsp into a similar 3 fund portfolio with vanguard, I was just seeking some advice on whether or not this was a good idea?
Rob: Before I ask my question, I want to say that I am a big fan. However, I do have a question about holding bonds in a portfolio. Bond coupons are at an all-time low. When bond coupons revert back to a normal level (like 5%) the value of the underlying bonds will suffer. With that as background, help me to understand how bonds (or a bond index fund) can help a portfolio.
My 401 k is in an aggressive mixed which has large, mid, small caps with fixed rate and bond portfolio. It has gotten me about 12-14% returns. I just opened a deferred comp plan which I’ve allocated 90% into an index that mimics the s&p 500 and 10% in short term treasury bonds. I cant wait until next year to compare my deferred comp to my 401k. Good video btw mate
This was excellent! I've been investing for a little over three years and never heard of the Portfolio Visualizer or M1 Finance. I feel like I just hit the mother lode of investment advise!
Just found your channel--so I have a lot of "catching up to watch!" I currently have a financial planner that I am paying a pretty penny to--I knew it was too much before I watched your episode on fees eating your retirement savings--so looking into M1, which I had never heard of before I found your channel. We are in retirement for 2 years now. Can you do an episode that would address a "3 Fund Portfolio" for those of us already in retirement? Thanks for sharing your insight with us wanna-be financial experts.
Finding your videos to be very thought-provoking for me as someone preparing for an early retirement. What I appreciate is that you make some complex ideas much easier to understand. Thanks for what you do!
Rob, great stuff. Two questions: 1) Why are bonds worth having in any long-term portfolio? In Jeremy Siegel's book Stocks for the Long Run (6th ed., pg 42), he shows how over any 10+ year holding period stocks' real returns historically outperforming bonds. Additionally, any historical analysis of a stock/bond portfolios always includes that magical bond bull run from 1980 to 2008 where interest rates dropped from 20% to 0.25%. A period of time that is not likely to be repeated anytime soon where interest rates just came down, down down and bond prices just went up, up , up. Lastly, while I have not run the numbers, I would be willing to bet that the weighted average financial leverage index (ROE/ROA) (not financial leverage ratio) for the aggregate of all S&P 500 companies is greater than 1.0 (which would explain Siegel's graph). If true, that means that in the aggregate all companies are getting a higher ROE than ROA. That means they are using their debt capital to get a higher shareholder return than they are paying debt holders to borrow their money. That means if I can choose whether to invest in their equity or their debt, I should choose their equity, not their debt. Question 2) Why do I need any foreign equity exposure if I buy an S&P 500 index fund? The estimated revenue from all S&P 500 companies is 30%, according to SPIVA. Why would I want more foreign exposure than that? I would love to hear your take on both of those topics. I value your intellect and research. Keep it up. Thank you.
This information is extemely valuable at my point in life age 62. Your style of teaching is so calming and simple *in a good way it keeps my attention! AWESOME Video Rob!
Just found your channel. So far this may be one of my favorite videos of yours. It really highlights the main aspects of investing, be diversified and keep it simple.
I’ve been thinking about simplifying my approach to investments ( someone in their 60's) and like the 3 to 6 fund approach. More on the the topic of investments paths for this age group would be fantastic!
I’m in the same boat. I have managed retirement accounts that I don’t ever need to touch. I want to leave them where they are and start new investments on my own. These investments I start on my own will be taxable accounts. I started this month with Vanguard VFIAX. $3000 initial investment and $200 a month for now. I just turned 62 and plan to start social security at 65 with half of it going to these new investments. I just don’t know where to go from here. Not sure if this 3 fund strategy is the same for taxable accounts. Advice for folks in our age group would be great!
Clear video. I personally do not understand bonds, emerging markets, or small caps. But S&P 500, Russell 1000, Utility index, and international developed market I understand and feel comfortable with. The reason why I don’t understand emerging market is because it includes the most ancient civilizations such as China, India, and others. These civilizations have been existing for thousands of years and yet they are “emerging markets.” I don’t buy it.
Thanks the great explanation. You're videos have been so infomative for me. I have started using your 6-fund pie for my genereal investing and implimented the same philosophy with my 401k Funds. I'm using the 120 age rule to calculate the bond percentage, then calculate the equity percentages from the ratio of just the equity funds in the 6-fund pie. Since my 401k does not have a Real Estate Fund, I replaced it with a Mid Cap Blend fund.
Hi Rob - two years plus later do you still recommend the M1 Finance app? Really intrigued by it's flexibility. Would this be a good place to roll my entire Retirement Portfolio to?
I don’t really get investing in bond funds. I’ve never seen them do particularly well even when they’re doing okay. And when they suck they truly suck.
I just found your channel and want to thank you for a really good video. I have watched many videos that talk about finance and give no real info just jibber jabber. Anyway I just want to say thank you!
I'm a huge fan of your videos, Rob. Thanks for your no-nonsense style. I just started watching a week or so ago and I've been binging them. Well done. I'm curious why you recommend an int'l index fund as well as a the total US stack market index. I'm a fan of what J L Collins has to say about this in his book The Simple Path to Wealth, where he points out that VTSAX contains many int'l companies, since many US companies are int'l companies.
I currently have 75% SCHD and 25% SCHG Roth IRA. Brokerage account is SCHD, VOO, VUG, alongside some individual stocks! Just passed 500K from an initial 65K startup last year. I am 43 and I plan on working until 50 hope to be at ~$1M soon enough
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. Well done on profits!
Nice. I'm doing some research on VOO & SCHD now, seems like very solid choices. Congrats on nearing retirement. 7 years will fly.....unless of course you hate your job lol....
Wooooo crushing it! Awesome!
Love my job. Over 25 years as a mechanic for a Major Airline. Great company. Just wish I knew about stocks, index funds, growth/dividend paying ETFs years ago. But still with a good CFA I am doing great. It's a nice hands-off way to approach it. Lina Dineikiene manages my funds and she has a great team. I conservatively follow her recommendations and market entry and exit points, and tbh this system makes it possible for me.
Great advice here. Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out.
Why does this guy seem so honest and trustworthy? Nice presentations.
You should have millions of subscribers. Clear, intelligent, transparent and refreshing! Much appreciated.
You have one of the very best finance and investing channels on UA-cam and deserve way more subscribers. So sick of all the finance bros! You’re a breath of fresh air
Thanks for such simplicity. Where were you when I was 50 years old. It’s time to educate my children.. Thanks again
So similar to what Fed workers have for their TSPs and it WORKS.
This was one of the best financial videos I've ever watched. Thank you so much.
Hi Rob,
I’m coming to this video in the middle of the night as I watch over my newborn son. I’ve been thinking a lot about the future and seeing your deep dive and the thought process behind your choices is amazing.
Thank you for taking the time to walk us through this and to provide the links as additional guidance. This is all amazing stuff!
You’ve got a whole new subscriber!
Currently I'm just being smart and frugal with my money, I'm in the green 47% over the last 23 months and l've accumulated over $70K in pure profits from DCA’ing into stocks, ETFs, dividends and futures. However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait.
Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look.
@@jamescomb1170 I completely agree. I have been consistent with my profit regardless of the market conditions. I got into the market early in 2019 and the constant downtrends and losses discouraged me, so I sold off. I got back in December 2020 and this time with guidance from an investment adviser who was recommended by a colleague
HOLD hold hold...just leave them!
Rob I want to thank you. I just discovered you a few weeks ago. I pulled my money from my financial guy who gave me an over complicated portfolio. I’m going solo and slimming down to your simple 3 fund portfolio. I hope you keep doing what you’re doing-A mitzvah for your followers! I am beyond grateful. I have learned so much.
Excellent advice. Investing to me is like losing weight both are simple but not easy. Your temperament is the most important part.
True. If I had to choose just one fund to invest forever it would be Berkshire Hathaway. And to lose weight buy a commercial versaclimber. Done and done.
You're like the wise uncle I never had, Rob! Appreciate the education ✌️
Great video, about one year ago I moved my investments over to Vanguard. The Edward Jones advisor had me in 9 different funds averaging over a 1 percent expense ratio and all were front load fees. Now I am in 4 different funds and I am saving on fees and have the extra working for me not going to the advisor.
How’s it going with vanguard? Thinking of switching myself!
@@Noah4evaa So far I am happy with them. When I retired I am going to stay with Vanguard.
I’m 53 with this breakdown...
50%. S&P 500 passive index
30% Small Cap passive index
20% Int passive Index
YTD: 16%
I just posted up the last comment with asset allocation. Question...what do you think of bonds at this time? They seem worthless, especially with the threat of inflation now a days...thoughts?
Fantastic context Bob…. Presented in an exceedingly kind and forgiving way. Thank you.
been using M1 for a couple months now and definitely enjoying it. There is a rebalance feature but one thing to keep in mind this will create a taxable event. If you just adjust the percentages you want in each ticker it will eventually balance itself as you invest money into it without creating a taxable event. Amazing feature!
You can create a roth ira or a traditional ira with M1 Finance. So that the taxable events won't happen when you re-balance.
You are experiencing tax events because you are in a Brokerage account and not in a Tax Deferred account - like an IRA or 401(k).
@@Tbay007 What if their Roth IRA is already maxed out so this is a secondary brokerage account?
I thoroughly enjoyed this video. I wish I had been taught this back when I started investing. Thank you for taking the time to explain this investing approach clearly. The tempo, tone and graphics of your delivery are perfect. There is no fluff or unnecessary information. You now have a new subscriber.
I did some sensitivity testing using Portfolio Visualizer on the Bogle Three Fund portfolio. Turns out that while the Mid Cap Value Index has a lower return than Small Cap Value, it also has a substantially lower standard deviation. So instead of having 40/10 Total Market/Small Cap Value mix and going for 30/20 Total Market/Mid Cap Value mix you can have a higher CAGR and a lower standard deviation. In fact, it's the same StDev as only investing in the Total Market for US stocks with a better Best Year (not surprising) and a better Worst Year.
Rather than look at CAGR and STDev over a long period, use the tab on Portfolio Visualizer to compare rolling three and five year numbers.
What does CAGR mean? And what is meant by a sensitivity test? Thank you much. I'm learning and found your post very interesting.
@@finesgomez4154 CAGR - Compound Annual Growth Rate. Sensitivity testing is making small changes and observing the result.
Excellent presentation. I am planning on retiring from Federal service in 2022, keeping 5 years of expenses in the TSP G Fund and rolling the rest into an IRA. You’ve given me much “food for thought”.
That is such a great plan. It's tough to set aside funds to earn peanuts when the market is roaring. I know you wrote this a year ago (before the market decline). One of THE biggest risks to a retiree's portfolio is a significant loss at the onset of retirement because the funds can't "grow" back if you have to spend them. If you carved out 5 years worth of expenses and put them in the G fund prior to retiring and prior to the worst start to a year for a 60/40 portfolio ever, you were able to mitigate one of the biggest retirement planning risks. Did you execute your strategy?
@@seetheforestthroughthetreesI apologize for not getting back sooner with an update. I retired May 31, 2022. I actually changed my original plan a bit. Since I have a pension that more than covers expenses, I don’t need to have 5 years in the G Fund. Actually, I’m more aggressive so I have 20% G and 80% in Schwab’s S&P index SWPPX. I don’t plan on making any withdrawals until I turn 62 (in 2 years) and that amount will be approximately 3.3% of my balance. So far so good. I’m up about 16% overall since retiring. Thanks.
Great video!
I have a 3 fund portfolio with Schwab: SWPPX-S&P 500, SWMCX-US MID-CAPS and SWSSX- SMALL-CAPS.
I just have it automated where monthly I contribute equal amount to each index.
VOO performs slightly better than SWPPX
Rob, your videos are both, timeless and priceless: please keep them coming!
I've been emulating this with VOO VXF VXUS and BND. Added the VXF to get some mid-small cap exposure. Happy with is so far.
long term returns of VTI is same as VOO+VXF.
Last year VXF did well and many will tend to use small caps.
For simplicity VTI+VXUS+BND is just fine.. sometimes I feel VUG+VXUS+BND is fine
@@JoeC5050 I wasn’t very clear. I use VXF to overweight mid/small cap (compared to VTI
I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio of $450k dwindle away is such an eye -sore.
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I would recommend doing EXACTLY what this video suggests. Just decide your ratio depending on your age. Keep doing it monthly and don't worry about what the numbers do in the short term. It's your best bet to long term growth
Add total US bond for stability. Keep it at 5% and play up or down from there. And if you have some securities overlapping just avoid them.
also seems like your risk tolerance is pretty low so 60% stocks and 40% bond seems like it might fit your risk tolerance.
You just validated my Monte Carlo analysis I’ve been doing and got my best performance with the Buffet strategy.
Very helpful for a single woman who is starting to invest in her children's future. I will recommend your channel to others. I love the page "portfolio visualizer".
Love M1 Finance.. it’s just so easy to use
You should do a book review of J.L. Collin's The Simple Path to Wealth. In it he distinguishes between investing when you are employed and when you no longer work. During the growth phase, he advocates putting everything in a stock index fund that tracks the S&P, which he points out has significant international exposure because so many of the S&P companies are international. During the preservation stage, he sees a place for bond to reduce volatility when regular contributions to one's retirement plans are no longer being made.
I read his book years ago. A review is a good idea. The problem with a 100% stock portfolio is that it can underperform say a 90/10 portfolio over a very long time period. That said, we are in unchartered waters with the current bond market.
I should add that I agree that the S&P 500 companies operate throughout the world. However, I see no reason to ignore 85% of the GDP in the world. Yes, the U.S. has been the dominant economy since WWII, but should we make a bet that it will continue in that role for the next 50 years?
Your videos are all straightforward and to the point. Will recommend your channel to my daughter who is just started her career.
I can’t believe I just now found your channel on UA-cam. Thank you for sharing your great knowledge. Subscribed.
Explained clearly and accurately. Was having some confusion around bonds until watching this. Thank you!
I have always run 85% total market mutual funds and 15% bonds. I can tell ya after 20 years of investing I wish I would have had 0% bonds . leaving gains on the table. I would have used a dividend reinvestment fund instead if I knew any better.
Long term treasuries outperformed the S&P 500 the past twenty years from 2000-2020 and so did gold.
@@somchai9033 that has been possible only because bond yields - and inflation in the overall economy - have generally been declining for the last 20 years. This will not be possible to continue going forward.
In a growing economy with almost no inflation (maybe some deflation), equities do very well and outperform bonds.
I recommend to check growth and price trends to understand in which environment you are and to balance accordingly.
There is no perfect ratio of bond/equity, it is changeable based on the two above conditions.
I'm 41 years old. 100% in either SWPPX or Fidelity 500. Over 600k of it in my retirement account. Plan to do so until at least 55. However, I do have a retirement plan that I coinvest with my employer which I cannot move unfortunately.
Regardless of one's age and the amount of money at stake, can't see why someone would have more than 6-7 years worth of living money in bonds....
I mean retirement accumulation portfolio sure. For actually spending anytime soon. Not a good idea
Fantastic content! Exactly what I was looking for. You should have millions of views by now. Anyways Thank you!
Just found your channel yesterday, your videos are so helpful to a newer investor in 50’s. Would love some more videos on getting started late to investing:) Thank you!
I am in my 50s and a new-ish investor as well. Do you have any other good references to pass on to me? Thank you!
Can you do a video or offer advise to someone who has already retired but does not plan on making any withdrawls for another 10 to 15 years with no more money going in to the plan? Can you point me in the right direction? I just ran into your videos and really enjoy the information and presentation.
This guy is correct imho. The lower the number of funds (or in my case investment trusts) the better, although i would have 4 as a minimum and 8 as a maximum. It is also a lot easier to get in when prices are low after corrections, crashes etc. Also, for this reason don't forget to hold some cash.
I like this topic and that's what i was looking for. thanks Rob!
Very nice. Have been a Vanguard boglehead for decades. Would have been very helpful if you compared the n-fund portfolios in Portfolio Visualizer and explained the difference in standard deviation and sharpe ratio between them. The risk adjusted returns is a big reason to build out the portfolio as you have done with asset classes known to reduce risk due to how much correlation there is between them. Really good stuff though. Enjoy watching your videos and well done explanations.
I'm more of a four stock guy. I revile fees. 4 and done. DCA monthly regardless of price. AAPL, MO, TSLA and UNH. I don't trade. I buy for life.
This an incredible finance video. Thank you very much.
I was very sceptical as I saw the title of the video but it made me curious and at the end it was a video worth watching.
Vanguard Wellington fund and Vanguard Wellesley Income (50/50) crushes the 3 fund portfolio with 5% less volatility. All without the need to ever rebalance. Also generates 4x as much income as the 3-fund portfolio.
What are you basing this on?
The Wellington fund is not even 4 years old yet (inception November 2017). So you are basing their returns of this fund only 4 years of data?!
Also, the expense ratio of the Wellington fund is about 8.5 time higher than the Vanguard total stock market index fund-0.34% for Wellington vs 0.04% for VTSAX!
This will eat away at your personal return year after year.
Please show your data comparing portfolio returns on $10k for 1, 3, 5, 10 years and longer (which unfortunately you can’t with such a young fund) and account for the drag of the extra expense ratio.
Show *with data* that your 50:50 split *crushes* the three fund portfolio, please. I would love to be convinced…
I’d love to see the side by side comparison of your 50:50 vs Rob’s 50:30:20 in terms of personal return. Short term and long term.
@@stephanien6237 the Wellington I believe is one of if not the oldest funds around. There is data going back to the 1920’s.
I would like to hear Rob’s opinion on those funds.
VTI has you covered. No need for international. Bonds are going to be making very little as interest rates rise.
🙈🙈🙈
Rob, this is so good! You've earned a new subscriber in myself. Thank you for putting it where us goats can get it!
Such an excellent video. Great simple presentation. Thank you Rob!
Fantastic exactly what I was looking for. Thanks Rob
Lol, love the "it's not broken. Let's get back to the portfolio." Thank you for the information.
Oh yeah👍.. watched your VTI vs VOO vid. Made my choice. Bought a couple books.. Like to learn about M1 finance.
Thank you! This was the most informative video I have found. Subbed
Thanks Rob.... 5-Fund portfolio for the taxable, 6-Fund portfolio for the Roths.
Do sensible; just love that you share your wealth of knowledge and information! 😊
Why would you use M-1 if all your ETFs are Vanguard? Why not just use Vanguard? Would not the fees be lower?
Excellent video, Rob! You are THE BEST!
My 3-Fund Portfolio Article: robberger.com/three-fund-portfolio/
Hi ya Rob . . . have you posted your "notes" from this presentation yet? If so, where can I find them? Thanks for all you do as well!!!
@@chipsndiptrio Here you go: robberger.com/three-fund-portfolio/
@@rob_berger Thanks much. Please send your bill to my wife's attention.
@@chipsndiptrio :) The best things in life are priceless!
@@rob_berger The biggest thing that confuses me when investing for the long haul is why you need to be diversified at all. Why would anyone need anything other than one good total market index fund? I mean, let's compare 2 funds, one is 100% SWTSX and the other one is 80% SWTSX and 20% Bonds. OK, so the market goes down 30%, how does that help the fund with 20% bonds? Sure, fund number 2 with 20% bonds doesn't go down as much, but if you're investing for the long term, you're not gonna touch that money anyway, right? And that means you're gonna miss out on lots of upside growth when the market recovers if you've got 20% bonds, right? Is it just a matter of helping people sleep at night? Or something else? What am I missing?
Best video I’ve seen that breaks down the 3 fund/ETF portfolio. Just sent to our 3 kids - 1 in high school, 1 in college and 1 about to graduate college. Fingers crossed they follow the advise. We have Schwab and TSP accounts - wish they had a one button rebalance option as well. Great feature in M1 Finance. Thanks for the insightful videos
I have TSP, love M1 been using it for over 2 years and open an account for all my 5 kids, hopefully the follow too.
They’re all in Crypto 😂 (hopefully not)!
This is the best content you have created.
Hello sir, do you have a video for people close to retirement. A portpolio for income stream in retirement ?
THANK YOU SIR 😊
Biggest lesson i learnt in 2023 in the stock market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.
Nobody knows anything; You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.
Uncertainty... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
Could you kindly elaborate on the advisor's background and qualifications?
“NICOLE ANASTASIA PLUMLEE’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Just ran an online search on her name and came across her websiite; pretty well educated. thank you for sharing.
I really liked the info on reits in tax savings account. I’m learning so much on UA-cam, thanks for what you do.
Great advice. I'm hammering this type of advice into my kids in their early 20s.
Great video. Thank you for taking the time to put this together. I've been torn on should I buy the top ten large cap stocks or go with an ETF. The diversification a ETF/Mutual can provide is unbeatable and in today's world cheep too.
I'm in Canada with some USD in a tax-deferred account... wasn't sure how to deploy my cash but this video helps! Thanks again Rob, really appreciate your pragmatic and detailed explanation to deploy a logical (and very simple) strategy. Keep up the great work, you are doing a good service.
Thanks Rob, this video is very helpful. I just implemented the 5-Fund Portfolio
You are wonderful, thank you very much. So glad I found you!
Excellent video. I look forward to every new video. I am early in retirement, and now wish I have taken a similar approach to the one shown in this video. I have several brokerage accounts. I have ended up with too many individual investments. I use a spreadsheet to keep track of it all. My best returns have come from simple broad funds that are left alone. My main uncertainty these days is allocation of bonds in low yield and rising rate environment. Thanks again for your great work.
Hello, I’m interested in moving money from my tsp into a similar 3 fund portfolio with vanguard, I was just seeking some advice on whether or not this was a good idea?
Rob: Before I ask my question, I want to say that I am a big fan. However, I do have a question about holding bonds in a portfolio. Bond coupons are at an all-time low. When bond coupons revert back to a normal level (like 5%) the value of the underlying bonds will suffer. With that as background, help me to understand how bonds (or a bond index fund) can help a portfolio.
Sounds to me like you already know the answer, you’re just looking for reassurance?
I'm hoping Rob will respond to this question--it's my question, too.
@@Bokescreek It's my question also.
At the moment, Bonds are just VERY slightly better than putting your money beneath the matress.
still no answer ((
@rob berger please be so kind to say a word )
This video was incredibly helpful. Thank you.
I like your approach. Straight forward & sinple.
Very informative video Rob. Great job! Thanks for sharing…Ed
My 401 k is in an aggressive mixed which has large, mid, small caps with fixed rate and bond portfolio. It has gotten me about 12-14% returns. I just opened a deferred comp plan which I’ve allocated 90% into an index that mimics the s&p 500 and 10% in short term treasury bonds. I cant wait until next year to compare my deferred comp to my 401k. Good video btw mate
Great show Rob! Thank you very much for sharing your knowledge.
This was excellent! I've been investing for a little over three years and never heard of the Portfolio Visualizer or M1 Finance. I feel like I just hit the mother lode of investment advise!
Just found your channel--so I have a lot of "catching up to watch!" I currently have a financial planner that I am paying a pretty penny to--I knew it was too much before I watched your episode on fees eating your retirement savings--so looking into M1, which I had never heard of before I found your channel. We are in retirement for 2 years now. Can you do an episode that would address a "3 Fund Portfolio" for those of us already in retirement? Thanks for sharing your insight with us wanna-be financial experts.
Finding your videos to be very thought-provoking for me as someone preparing for an early retirement. What I appreciate is that you make some complex ideas much easier to understand. Thanks for what you do!
GOOD JOB INFO. WELL DONE. THANK YOU SO MUCH MR BOB
This was so helpful. Thank you.
just found your this video. I am thankful to you for the clarity and information shared.
Rob, great stuff. Two questions: 1) Why are bonds worth having in any long-term portfolio? In Jeremy Siegel's book Stocks for the Long Run (6th ed., pg 42), he shows how over any 10+ year holding period stocks' real returns historically outperforming bonds. Additionally, any historical analysis of a stock/bond portfolios always includes that magical bond bull run from 1980 to 2008 where interest rates dropped from 20% to 0.25%. A period of time that is not likely to be repeated anytime soon where interest rates just came down, down down and bond prices just went up, up , up. Lastly, while I have not run the numbers, I would be willing to bet that the weighted average financial leverage index (ROE/ROA) (not financial leverage ratio) for the aggregate of all S&P 500 companies is greater than 1.0 (which would explain Siegel's graph). If true, that means that in the aggregate all companies are getting a higher ROE than ROA. That means they are using their debt capital to get a higher shareholder return than they are paying debt holders to borrow their money. That means if I can choose whether to invest in their equity or their debt, I should choose their equity, not their debt.
Question 2) Why do I need any foreign equity exposure if I buy an S&P 500 index fund? The estimated revenue from all S&P 500 companies is 30%, according to SPIVA. Why would I want more foreign exposure than that?
I would love to hear your take on both of those topics. I value your intellect and research. Keep it up. Thank you.
Bogleheads love this combo. I use a 2 fund portfolio, VTSAX and VBTLX. I was 100% VTSAX initially, now 70/30.
What the hell is a "boglehead"???
@@crimsonpearl4686 financial followers of the late Jack Bogle. Founder of the Vanguard Group of mutual funds.
This information is extemely valuable at my point in life age 62. Your style of teaching is so calming and simple *in a good way it keeps my attention! AWESOME Video Rob!
Rob when I compare the International Fund w' the S & P (1 yr. & 5 yr.) it's lags so far behind so why include it?
Yes but this 3 fund portfolio earns 1.75% yearly yield, which can be taxable. So that doesn't serve well for desired growth of money
Just found your channel. So far this may be one of my favorite videos of yours. It really highlights the main aspects of investing, be diversified and keep it simple.
Superbly done! Thank you!
Another excellent voice of common sense reason.
I’ve been thinking about simplifying my approach to investments ( someone in their 60's) and like the 3 to 6 fund approach. More on the the topic of investments paths for this age group would be fantastic!
I’m in the same boat. I have managed retirement accounts that I don’t ever need to touch. I want to leave them where they are and start new investments on my own. These investments I start on my own will be taxable accounts. I started this month with Vanguard VFIAX. $3000 initial investment and $200 a month for now. I just turned 62 and plan to start social security at 65 with half of it going to these new investments. I just don’t know where to go from here. Not sure if this 3 fund strategy is the same for taxable accounts. Advice for folks in our age group would be great!
Clear video. I personally do not understand bonds, emerging markets, or small caps. But S&P 500, Russell 1000, Utility index, and international developed market I understand and feel comfortable with. The reason why I don’t understand emerging market is because it includes the most ancient civilizations such as China, India, and others. These civilizations have been existing for thousands of years and yet they are “emerging markets.” I don’t buy it.
Thanks the great explanation. You're videos have been so infomative for me. I have started using your 6-fund pie for my genereal investing and implimented the same philosophy with my 401k Funds. I'm using the 120 age rule to calculate the bond percentage, then calculate the equity percentages from the ratio of just the equity funds in the 6-fund pie. Since my 401k does not have a Real Estate Fund, I replaced it with a Mid Cap Blend fund.
Hi Rob - two years plus later do you still recommend the M1 Finance app? Really intrigued by it's flexibility. Would this be a good place to roll my entire Retirement Portfolio to?
Following
Why have any international exposure -- they really lag behind the S&P ETF over the 30 years?
I don’t really get investing in bond funds. I’ve never seen them do particularly well even when they’re doing okay. And when they suck they truly suck.
Excellent video Rob!
What a fantastic video thank you.
Great info!!!
im in the uk and find this very useful at 51 im doing a 70 FTSE global all cap,20 S&P 500 and i 10 life strategy fund (all vanguard uk )
I just found your channel and want to thank you for a really good video. I have watched many videos that talk about finance and give no real info just jibber jabber. Anyway I just want to say thank you!
Glad it was helpful!
I'm a huge fan of your videos, Rob. Thanks for your no-nonsense style. I just started watching a week or so ago and I've been binging them. Well done.
I'm curious why you recommend an int'l index fund as well as a the total US stack market index. I'm a fan of what J L Collins has to say about this in his book The Simple Path to Wealth, where he points out that VTSAX contains many int'l companies, since many US companies are int'l companies.
Excellent video. Thank a lot of value from this video
Great video! Thank you!
Rob I would love to have seen you take the 4 and 6 pie and compared it to the 3 fund portfolio in PortfolioAnalyzer