The Three-Fund Portfolio prioritizes simplicity in diversification by owning the whole world in just three low-cost index funds.
Home Country
Portfolio Charts is able to translate portfolio information to the local currency, inflation, and available funds of many different countries. Choose the home country where you live, and it will update every section of the page.
Asset Allocation
How to build a Three-Fund Portfolio
| % | Asset Class |
|---|---|
| 64% | United States Large Cap Blend Stocks |
| 16% | Developed ex-US Large Cap Blend Stocks |
| 20% | United States Intermediate Term Treasury Bonds |
Asset Notes
1. Larimore specifically recommends international stocks equal to 20% of the equity portion of the portfolio. Since the default version here on Portfolio Charts includes 80% stocks, I allocated 16% (20% of 80) to international.
Other Versions
Larimore does not recommend a specific percentage of bonds. Instead, he suggests that you should select the percentage according to your age, goals, timeframe, and risk tolerance. 20% bonds is his preference as a reasonable starting point for comparison purposes, but you can also customize the percentage to your own needs.
Author
Taylor Larimore
Taylor Larimore is a finance veteran, author, and long-time poster at the Bogleheads forums. You can read about the Three-Fund Portfolio in his book The Bogleheads’ Guide to the Three-Fund Portfolio.
Overview
The Three-Fund Portfolio was created by Taylor Larimore after being inspired by the writings of Jack Bogle to simplify the investments from his own complex mix of 16 different funds to something much more sustainable. The original version back in 1999 actually included four funds — domestic stocks, international stocks, bonds, and cash. But as interest rates dropped over the years Larimore simplified even further, and the Three-Fund Portfolio took its final form.
While the percentages cited on Portfolio Charts represent Larimore’s suggestion for a reasonable starting point for study, he doesn’t actually see it as a single fixed asset allocation. Instead, he recommends adjusting the percentage of bonds according to your age, goals, timeframe, and risk tolerance. Those factors may naturally change over time, and the Three-Fund Portfolio can change right along with them. So it’s more than just an asset allocation — it’s a portfolio meant to grow right alongside the investor for life.
Featured Discussion
Performance
Since 1970, an investor in the United States holding the Three-Fund Portfolio earned an average 6.9% real return, with a baseline CAGR of 3.3% over 15 years. It supported a 4.3% safe withdrawal rate for 30 years and 3.6% indefinitely. Its worst peak-to-trough loss was 42%, and the longest a new investment spent below water was under 13 years.
Three-Fund Portfolio Performance
| # | Metric | What it measures |
|---|---|---|
| 6.9% | Average return | Mean annual return after inflation |
| 3.3% | Baseline real return (15 years) | What 15-year stretches returned in the weaker outcomes |
| 4.3% | Safe withdrawal rate (30 years) | Highest spending rate that lasted 30 years in the worst case |
| 3.6% | Long-term withdrawal rate | The SWR floor over very long retirements |
| 42% | Deepest drawdown | Worst peak-to-trough loss after inflation |
| 13 years | Longest drawdown | Longest a new investment stayed below what you put in |
| 13.8% | Volatility (standard deviation) | Year-to-year variation in returns |
Stats for all home countries
Summary Stats by Home Country
| Home country | Average | Baseline | SWR | LTWR | Deepest | Longest | Volatility |
|---|---|---|---|---|---|---|---|
| Australia (aus) | 5.9% | 4.6% | 3.0% | 2.5% | 60% | 16 years | 15.5% |
| Canada (can) | 6.6% | 4.0% | 4.3% | 3.7% | 38% | 11 years | 12.5% |
| France (fra) | 7.2% | 3.7% | 4.0% | 3.2% | 41% | 14 years | 17.9% |
| Germany (deu) | 6.8% | 4.3% | 3.9% | 3.1% | 45% | 14 years | 17.7% |
| Italy (ita) | 5.7% | 0.9% | 2.4% | 1.9% | 69% | 20 years | 20.8% |
| Japan (jpn) | 6.5% | 0.9% | 2.9% | 2.2% | 50% | 25 years | 18.6% |
| Netherlands (nld) | 7.8% | 3.9% | 3.9% | 3.3% | 46% | 14 years | 17.0% |
| Spain (esp) | 6.0% | 0.8% | 2.1% | 1.8% | 75% | 24 years | 19.6% |
| Sweden (swe) | 9.7% | 6.5% | 4.6% | 4.1% | 46% | 12 years | 19.9% |
| Switzerland (che) | 6.4% | 3.4% | 3.7% | 3.1% | 49% | 15 years | 16.5% |
| United Kingdom (gbr) | 6.3% | 3.4% | 4.2% | 3.2% | 62% | 13 years | 16.6% |
| United States (usa) | 6.9% | 3.3% | 4.3% | 3.6% | 42% | 13 years | 13.8% |
To see this portfolio from a specific home country’s perspective, link readers to this page with ?home=COUNTRY added to the URL, using the codes shown in parentheses in the table above (e.g. ?home=aus). The portfolio itself is fixed by the page, so ?pk= has no effect here. More in the Guide for AI Assistants.
Charts
Different ways to visualize the Three-Fund Portfolio
Comparisons
How the Three-Fund Portfolio compares to other options
Alternatives
Portfolios with a similar structure or design intent
Classic 60-40 — A similar Bogleheads staple without the international fund
Core Four Portfolio — Four simple index funds to own the market and minimize risk
Total Stock Market — A simple and effective broad domestic stock index fund
Articles
Insights that mention the Three-Fund Portfolio
Discussion
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