The 3-Fund Portfolio
The simplest, most diversified approach to long-term investing — recommended by Bogleheads. Adjust the sliders to see how US stocks, international stocks, and bonds affect expected return, risk, and long-term growth.
The simplest, most diversified approach to long-term investing — recommended by Bogleheads. Adjust the sliders to see how US stocks, international stocks, and bonds affect expected return, risk, and long-term growth.
Owns every publicly traded US company — thousands of stocks in one fund. Low cost and broadly diversified within the world's largest economy. Historically ~10% annual return but with meaningful year-to-year swings.
Example funds: VTI (Vanguard), FZROX (Fidelity), SWTSX (Schwab)
Developed and emerging market companies outside the US. Reduces concentration risk — the US is only ~60% of world market cap. Different economic cycles mean international markets don't always move in lockstep with the US.
Example funds: VXUS (Vanguard), FZILX (Fidelity), SWISX (Schwab)
Lower return, lower risk. Bonds tend to hold value (or rise) when stocks fall, providing stability and a rebalancing buffer. More bonds means smaller drawdowns — important when you're close to spending the money.
Example funds: BND (Vanguard), FXNAX (Fidelity), SWAGX (Schwab)
Assumptions: US stocks: 10.0% avg return, 15.5% volatility · International: 9.0%, 16.5% (forward-looking; lower valuations suggest higher expected returns than recent history) · Bonds: 4.0%, 6.0% · US-Intl correlation: 0.65 (long-run average; post-2008 correlation of ~0.75 overstates the diversification benefit) · Sharpe ratio uses 4% risk-free rate. Historical returns do not guarantee future results. Projection assumes a lump sum with no additional contributions.