Bogleheads Three Fund Portfolio
0.27%June 04 | MyPlanIQ portfolio symbol P_79077

Portfolio Overview

Bogleheads Three Fund Portfolio: A Lazy Portfolio for 401(k), IRA and Taxable Investors

The Bogleheads Three Fund Portfolio is about as simple as it gets. And for many people, that's exactly what makes it so powerful. Born from the philosophy of John Bogle, founder of Vanguard, and championed by the Bogleheads community, this portfolio isn't designed to beat the market --- it's designed to capture the market. Plain and steady. No guesswork. No market timing. Just broad diversification, low costs, and discipline.

It's especially useful for long-term investors --- people building toward retirement using 401(k)s, IRAs, and even taxable brokerage accounts. Anyone who wants a portfolio they can actually stick with.

Bogleheads Three Fund Portfolio Holdings

• VTI (Vanguard Total Stock Market ETF, 50%): Provides exposure to the entire U.S. stock market, offering diversification across large-, mid-, and small-cap stocks.
• VEA (Vanguard FTSE Developed Markets ETF, 30%): Covers international developed markets, adding geographic diversification outside the U.S.
• BND (Vanguard Total Bond Market ETF, 20%): Offers broad exposure to U.S. investment-grade bonds, reducing overall portfolio volatility.

That's it. Three funds. But under the hood, you're talking thousands of underlying securities. You've got U.S. stocks of all sizes, international developed markets (Europe, Japan, Australia), and a full spread of investment-grade U.S. bonds.

What's missing? Emerging markets. REITs. Commodities. None of those are in here. And depending on your view, that might be a limitation. Or maybe a strength. The point here is simplicity --- and less moving parts also means fewer ways to mess things up.

Diversification and Risk

This portfolio hits the core components: U.S. stocks, international developed stocks, and U.S. bonds. All three major building blocks are covered. It doesn't dive into niche assets like small cap value, gold, or TIPS. But the coverage is still pretty wide.

In terms of risk, this version (50% stocks US, 30% international, 20% bonds) lands in the moderate-to-aggressive zone. You'll feel the ups and downs. But it's not reckless. The 20% bond slice is enough to offer some cushion. And because BND includes Treasuries and corporates across durations, it's fairly balanced. Not as defensive as short-term bonds, but not overly exposed either.

Using the Bogleheads Portfolio in a 401(k) or IRA

This portfolio is very 401(k)-friendly. Most plans offer U.S. stock index funds, international stock funds, and some kind of core bond fund. If you can't find these exact tickers, it's okay.

Here's how to approach it:

• For U.S. stocks: use a total market or S&P 500 index fund. Even large-cap blend works.
• For international: find a developed markets or total international fund. If no developed-only option, total international works fine.
• For bonds: use a core bond fund or total bond index. If that's not available, use a high-quality actively managed bond fund that's broadly diversified. You can check this at MyPlanIQ's fixed income page.

Rule of Thumb for fund selection:

• For stock funds, prioritize index funds, especially low-cost ones.
• For bond funds, look for core bond funds or high-quality actively managed total return bond funds.

If your 401(k) plan doesn't offer an emerging markets fund (not needed in this portfolio), or small/mid-cap funds, that's fine --- VTI already includes those through its total market exposure. And if there's no international fund at all, you can either tilt toward U.S. only or use a globally diversified active fund with reasonable fees.

In a brokerage IRA, of course, you can just hold VTI, VEA, and BND directly. Low-cost, simple to manage, and easy to rebalance once a year.

As for risk level --- this portfolio is well suited to someone who can tolerate some volatility and still has 10+ years until retirement. If you're unsure, use the MyPlanIQ Asset Allocation Calculator to find your stock-bond mix. You can then scale this portfolio accordingly. For example, if you find out you should only be 60% stocks, then adjust to 30% VTI, 20% VEA, and 50% BND.

Taxable Account Considerations

This setup is also great for taxable brokerage accounts. All three funds are ETFs, which means they're generally tax efficient. They rarely distribute capital gains. Just hold and let compounding do its work.

VTI and VEA are especially tax-friendly. BND might generate some taxable interest income, but it's manageable. If you also have IRAs or 401(k)s, you can hold BND in those accounts and leave VTI and VEA in the taxable account --- a simple example of asset location.

If the market drops and you want to harvest tax losses, there are similar ETFs you can swap into temporarily --- for example, VTI to SCHB or ITOT. Just mind the 30-day wash sale rule. It's not hard, but you do have to track it.

Final Thoughts

The Bogleheads Three Fund Portfolio keeps things clean. No chasing trends. No exotic bets. Just broad, global diversification with low costs and fewer decisions to mess up. That's probably why it's stayed so relevant all these years.

If you're looking for a simple way to anchor your retirement savings --- or just get started without second-guessing yourself --- it's hard to go wrong here.

Asset Allocation

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Maximum Drawdown

Bogleheads Three Fund Portfolio Maximum Drawdown