Three-Fund Portfolio

The simplest diversified portfolio using just three index funds.

Allocation Breakdown

3 Assets

US Total Stock Market

International Stock Market

US Total Bond Market

Target Allocation

Asset Class	Weight	Example Ticker
US Total Stock Market	60%	VTI
International Stock Market	20%	VXUS
US Total Bond Market	20%	BND

Risk Level

Moderate

Rebalance Frequency

Annually

Advantages

Extremely low cost
Simple to manage and rebalance
Broad market diversification
Tax-efficient

Disadvantages

No exposure to alternatives (REITs, commodities)
US-heavy allocation
Bond allocation may be too conservative for young investors

About This Portfolio

The Three-Fund Portfolio is the most popular lazy portfolio, advocated by Bogleheads and index investing pioneers. It provides broad diversification across US stocks, international stocks, and bonds using just three low-cost index funds. Its simplicity makes it easy to maintain and rebalance.

Historical Context

Popularised by John Bogle, founder of Vanguard, this approach has consistently outperformed most actively managed funds over long periods. The philosophy is rooted in efficient market theory.

Who It's For

Long-term investors who want maximum diversification with minimum complexity. Ideal for beginners and those who prefer a hands-off approach.

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