Info
This is an abridged version of what I’ve written for my wife as part of a “When I’m Gone” document that helps to explain the details behind the management of our personal finances.
Investment Philosophy
- Buy-and-hold, long-term investing.
- Never try to time the market.
- Invest in the economy as a whole.
- Prefer index funds and avoid actively-managed funds.
- Minimize fees and taxes, but prioritize simplification over both.
- Stay the course!
Essentially, we follow the Bogleheads investment philosophy, while purposefully reducing complexity as much as possible.
Link to originalJohn C. Bogle
“Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth.”
Target Asset Allocation
Our target asset allocation should be aggressive, but not irresponsible. We seek a reasonable balance between performance and volatility that can be maintained lifelong during both our accumulation and withdrawal phases.
- Allocate 20% of the portfolio to fixed income (bonds).
- Invest the remaining 80% in equities (stocks).
- About ⅓ of stocks should be international.
- About ⅔ of stocks should be domestic.
One-Fund Portfolio
To align with our investment philosophy, we use a globally-diversified “One-Fund Portfolio”, which is a single identical investment across all accounts (Roth, Traditional, taxable, etc.) for our entire lifetime. Sticking with a single fund greatly simplifies our portfolio, eliminates the need to rebalance, and sidesteps a long list of potential behavioral pitfalls. It may not be “optimal” regarding fees and taxes, but it is certainly good enough. There is elegance in the simplicity.
To match our target asset allocation, we use Vanguard’s LifeStrategy Growth Fund (VASGX), which is low-cost and maintains a fixed asset allocation of 80% stocks and 20% bonds, a portion of each being international.