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Paul Farrell Second Grader
0.24%June 04 | MyPlanIQ portfolio symbol P_79089

  • Portfolio Overview
  • Asset Allocation and ETFs
  • Performance
  • Calculators
  • Rolling Returns
  • Drawdowns

Portfolio Overview


1. Background and Philosophy

The Second Grader's Starter Portfolio was created by Paul B. Farrell, a former investment columnist for MarketWatch and author of multiple books on lazy investing. Farrell advocated for simple, low-cost, and hands-off strategies that even a second grader could understand. His philosophy emphasized broad diversification, minimal maintenance, and long-term growth through index funds. This portfolio is designed to be a foundational strategy for beginners or those who prefer a passive approach.

2. Asset Allocation Analysis

The portfolio consists of three ETFs:

  • 60% VTI (Vanguard Total Stock Market ETF): Provides exposure to the entire U.S. equity market, including large-, mid-, and small-cap stocks.
  • 30% VEU (Vanguard FTSE All-World ex-US ETF): Covers international developed and emerging markets, excluding the U.S.
  • 10% BND (Vanguard Total Bond Market ETF): Offers diversified exposure to U.S. investment-grade bonds.

Key Aspects:

  • Diversification: The portfolio is well-diversified across U.S. and international equities (90%) and bonds (10%), reducing concentration risk.
  • Risk Level: Moderately aggressive due to the 90% equity allocation, but the bond component provides stability.
  • Pros: Low-cost, simple to manage, and captures global market returns. The heavy equity focus aligns with long-term growth goals.
  • Cons: Limited bond exposure may not suit risk-averse investors. No explicit allocation to alternatives like commodities or REITs.

3. Practical Application in Retirement Accounts

For 401(k) Accounts:

Investors can replicate this portfolio by identifying equivalent funds in their 401(k) plan:

  • VTI Alternative: Look for a U.S. total stock market index fund (e.g., Fidelity's FSKAX or Schwab's SWTSX).
  • VEU Alternative: Choose a broad international stock fund (e.g., Fidelity's FTIHX or Vanguard's VTIAX).
  • BND Alternative: Use a total bond market fund (e.g., Fidelity's FXNAX or Vanguard's VBTLX).

If exact matches aren't available:

  • Allocate the VEU portion to a mix of developed and emerging market funds.
  • Replace BND with a general bond fund or stable value fund if necessary.

For IRA Accounts:

Investors can directly purchase the ETFs (VTI, VEU, BND) or their mutual fund equivalents. IRAs offer more flexibility, allowing for precise allocation.

Note: Since commodities are rarely available in 401(k)s, investors can allocate that portion to stocks or omit it entirely.

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Asset Allocation


Symbol Category/Sector Target Weight
BND
Vanguard Total Bond Market ETF 		Fixed Income 10%
VEU
Vanguard FTSE All-World ex-US Index Fund 		International Equity 30%
VTI
Vanguard Total Stock Market ETF 		US Equity 60%


Historical Performance


Paul Farrell Second Grader Historical Returns

Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
Paul Farrell Second Grader 5.33% 13.12% 11.70% 11.91% 9.47% 10.75% NA 7.80%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) 2.03% 14.20% 14.72% 15.60% 12.92% 14.19% 10.37% 10.22%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) 5.23% 10.75% 8.37% 7.42% 6.31% 7.36% 6.07% 5.56%
Data as of 06/04/2025, AR inception is 04/10/2007

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Paul Farrell Second Grader Historical Return Chart


Calculators


Dollar Cost Average Calculator for Paul Farrell Second Grader

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Retirement Spending Calculator for Paul Farrell Second Grader

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Rolling Returns


From 04/10/2007 to 06/04/2025, the worst annualized return of 3-year rolling returns for Paul Farrell Second Grader is -7.41%.
From 04/10/2007 to 06/04/2025, the worst annualized return of 5-year rolling returns for Paul Farrell Second Grader is -0.8%.
From 04/10/2007 to 06/04/2025, the worst annualized return of 10-year rolling returns for Paul Farrell Second Grader is 5.43%.

Maximum Drawdown

Paul Farrell Second Grader Maximum Drawdown