A Simple and Lazy Investment Portfolio

I’m not an expert investor by any means, but I know enough to be able to build an incredibly simple but effective investment portfolio. My approach to investing is keeping things extremely minimal. I generally follow the Bogleheads approach to investing, which was pioneered by the retired CEO of Vanguard, John Bogle.

We have just three exchange-traded funds that make up our investment portfolio: 1) a domestic stock fund, 2) an international stock fund, and 3) a bond fund.

Exchange-traded funds (ETFs) are essentially like mutual funds in that they comprise of a whole basket of assets, but they can be bought and sold more easily like regular stocks. ETFs can be bought for less than $50, while mutual funds usually require a minimum investment of around $1500 or so.

Recently, I had to create a portfolio of funds for my husband’s retirement account. He quit his job back in June of last year to help run a family business, so we rolled over his IRA from his company’s brokerage firm to our own. Here’s what I did to take care of this process:

  1. Create new Rollover IRA account at Merrill Edge
  2. Submit withdrawal form to husband’s current brokerage account and provide them with his new account
  3. Wait for funds to appear in new Rollover IRA account
  4. Buy shares of each of the three ETFs I wanted until there was no cash left in husband’s account

buy-etf

 

What was important about buying the shares was making sure I was allocating the right amount to each fund.

three-fund-portfolio

VTI: Vanguard Total Stock Market

VXUS: Vanguard Total International Stock Market

BND: Vanguard Total Bond Market

 

I read that a good rule of thumb is to buy “roughly your age in bonds.” I only allocate about 10% instead of the 20+% I should be, just because we’re willing to take a little more risk.

Overall, I’ve been pretty happy with my decision to have just a three-fund portfolio. Because it’s nice and simple, I’m much more inclined to continue investing.

Suggested resource: The Bogleheads’ Guide to Investing

 

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