The Three-Fund Portfolio

A three-fund portfolio holds three broad index funds: one for U.S. stocks, one for international stocks, and one for bonds. Together they cover most of the investable market with a simple, low-cost structure.

The mix is the main decision. A common starting point for a long timeline is a higher share of stocks, with bonds added as you get closer to needing the money. The exact split depends on your goals, your timeline, and how much volatility you can tolerate.

Rebalancing means bringing your mix back to your target. If stocks rise faster than bonds, your stock share grows. You can rebalance by directing new contributions to the fund that has fallen behind, or by selling some of the winner. Many investors rebalance once a year, or when a share drifts well away from its target.

The main advantage of a three-fund portfolio is simplicity. You can review it in minutes, and it is easy to keep on track during market swings.

This page is a placeholder for a fuller guide. It does not recommend specific funds, percentages, or actions for any individual.