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The 1/3, 1/3, 1/3 allocation

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  • The 1/3, 1/3, 1/3 allocation

    Can someone help me understand the bogle head rationale for the total stock, total international, total bond even split? I understand it's diversification but I ask because to me that seems too much weight for both international and bond (especially for a young investor). I max out my 403b, 457, HSA and Roth but the first three have limited fund options (they have vanguard funds but not the full gamit of them). Thus I've decided to use the main three within those accounts to keep it simple but also keep expenses low. So the main question is: if those are my primary options in those accounts what should my allocation be? I'm 32 and looking for growth with decent risk tolerance so right now it's: 70% total us, 15% total international and 15% total bond. From all the other posts people post that seems like too much in one fund (albeit the most diversified one). Just not sure how to better diversify. Maybe REITs in my and my wife's Roths (they are directly with vanguard)? Any advice?

  • #2
    Your allocation is not unreasonable.. I'm 36 and 95% or so in equities and I have more allocated in index/large cap followed by international then an equal mix of mid/small caps and reits.  The location of our allocations vary given the limited fund options in our employers 403 and 457s with more fund options through my business 401k and ROTH IRA.  Look up WCI's 150 portfolio article...  Again emphasizing no wrong answer except perhaps too much bonds at your age.


    • #3
      Here's a link to that post:

      The point of that post is that there's nothing magical about the 3 fund portfolio. There are lots of good, low-cost, diversified portfolios. Pick one you like and stick with it. I also hold less international than 1/3 of my portfolio (although it's 1/3 of my equity) and less bonds than 1/3 (it's 25%). Do what you like, but write it down and stick with it.

      Helping those who wear the white coat get a fair shake on Wall Street since 2011