A simple, diversified, and low-maintenance way for beginners to invest for the long term
Thousands of stocks and bonds worldwide in just 3 funds
Rock-bottom expense ratios and tax efficiency
Easy to automate and rebalance once or twice per year
Most active investors underperform over long horizons
The 3-ETF portfolio is a simple, diversified, and low-maintenance way for beginners to invest for the long term. It uses three building blocks to create a globally diversified portfolio.
Thousands of stocks and bonds worldwide—all in just three low-cost funds.
Broad index ETFs typically have rock-bottom expense ratios and are tax efficient.
Easy to understand, automate, and rebalance once or twice per year.
Most active investors underperform low-cost index portfolios over long horizons.
Educational purposes only. These are not personalized recommendations. Always verify details (expenses, holdings, minimums, and tax implications) on each provider's website.
Pioneer of low-cost index investing
Offers zero-expense-ratio index funds
Competitive low-cost ETF lineup
Note: Ticker availability, fund names, and details can change over time. Always check the current prospectus before investing.
Your allocation is the mix of U.S. stocks, international stocks, and bonds in your portfolio. It should reflect your time horizon, risk tolerance, and the role this money plays in your life.
A common starting point for long-term investors who can handle some volatility is:
80% Stocks / 20% Bonds
Within stocks: 50% U.S. and 30% International
Rebalance once or twice per year to bring the percentages back in line.
Within stocks: 60-70% U.S., 30-40% International
Within stocks: 55-70% U.S., 30-45% International
Within stocks: 50-70% U.S., 30-50% International
Some younger investors choose not to hold bonds at all, especially in tax-advantaged accounts, because they:
Have a very long time horizon (20-30+ years)
Can emotionally and financially handle large market swings
Have stable income and strong emergency savings
Even if you choose 100% stocks when very young, you can gradually add bonds over time as your goals near and your risk tolerance changes.
Your portfolio should match your real life: your goals, income stability, time horizon, and emotional comfort.
Shorter goals
→ More bonds and/or cash-like savings
Critical goals (rent, necessities)
→ Keep separate from stock-heavy portfolios
Long-term retirement savings
→ More stocks, with a bond cushion to stay invested
Bonds are loans you make to governments or companies. They usually pay interest and tend to be less volatile than stocks, though they still carry risks like interest rate changes and inflation.
Bonds reduce the size of portfolio swings, helping you stay invested
A 20-30% bond allocation makes it easier to avoid panic selling in crashes
Bonds can be a source of funds to rebalance into stocks after large drops
Bonds pay interest, which can be reinvested or used for spending later
Core bond funds typically hold investment-grade U.S. government and corporate bonds.
Vanguard and others offer bond ETFs by maturity to match different portfolio needs:
For targeted exposure like international, inflation protection, or tax efficiency:
Diversify bond exposure globally across different countries and currencies
Help offset inflation impact on your bond portfolio
Tax-efficient income for some U.S. investors in higher tax brackets
Historically, stocks have returned more than bonds over long periods, but with much higher volatility.
Higher average annualized returns, but with big swings up and down
Lower returns, but more stability and predictable income
Smoother path, easier to stick with long term
Past performance does not guarantee future results.
Every investing choice involves a trade-off between potential return and the risk you take to get it.
Volatility
How much your investments can go up or down in value
Uncertainty
Includes short-term volatility and long-term uncertainty
Key Question
"How big a drop could I tolerate without selling?"
Growth
The growth of your money over time (including dividends/interest)
Higher Risk = Higher Return
Higher expected returns usually require accepting more risk
Goals
Helps you outpace inflation and reach long-term goals
More growth potential, but more volatility
Smoother ride, lower long-term return
It should let you sleep at night and stay invested
Compounding is the process where your investments earn returns, and those returns themselves begin to earn returns. Over long periods, this creates exponential growth.
You invest money into your 3-ETF portfolio
Your ETFs generate dividends, interest, and growth
You reinvest those earnings into more shares
Your earnings begin generating their own earnings
*Assumes 7% annual return. Actual results will vary. For illustration only.
The longer you stay invested, the more powerful compounding becomes
Small contributions early can beat larger contributions later
Automatically reinvesting dividends accelerates compounding
Consistency matters more than timing the market
The 3-ETF portfolio is powerful because it is simple, diversified, and low-cost. But no single strategy is right for everyone.
Massive Diversification
Exposure to thousands of stocks and bonds worldwide
Very Low Costs and Taxes
Compared with many active funds or frequent trading
Simple to Manage
Easy to automate contributions and annual rebalancing
Hard to Beat
Many professionals struggle to outperform after fees and taxes
Flexible
Allocations can be adjusted as your life and goals evolve
Market Volatility Remains
A simple portfolio still goes up and down with markets
May Feel "Too Simple"
For investors who enjoy picking stocks or sectors
Requires Discipline
Must stick with the plan during downturns and rebalance instead of reacting emotionally
Not Customized
Doesn't address niche goals like factor tilts or complex tax strategies
Who want a clear, evidence-based starting point
Who value simplicity over optimization
Who can commit to a decades-long plan
Who prefer passive, hands-off investing
This website is for education only and does not provide personalized financial advice. Consider speaking with a qualified professional about your specific situation. Past performance does not guarantee future results.