The Three‑Fund Portfolio (Index Fund Simplicity for Beginners)

What is the three‑fund portfolio?

• US total stock market index
• International total stock market index
• US total bond market index

Why beginners love it

• Diversified across thousands of companies
• Ultra‑low fees; fewer moving parts
• Easy to rebalance once or twice a year

Asset allocation (rules of thumb)

• 80/20 stocks/bonds for long timeline
• 60/40 if volatility stresses you out
• International stocks: 20–40% of stocks bucket

How to buy (401k, IRA, brokerage)

• 401(k): use target date or 3 comparable funds
• IRA: pick low‑cost index equivalents
• Brokerage: same three funds; automate contributions

Rebalancing in 10 minutes

• Pick a date (every 6 or 12 months)
• Shift winners back into laggards to restore targets
• Avoid constant tinkering

Common mistakes

• Chasing hot sectors vs sticking to plan
• Forgetting bonds entirely
• Ignoring fees and taxes