He Has Read Over 250 Investing Books. He Recommends These Three Funds.
I was browsing the Bogleheads forum recently, when an “old” post from 2014 was brought to the top of the page by a new comment. The thread was started by Taylor Larimore, revered Boglehead Emeritus. In the post, Mr. Larimore states, “Nearly everything I know about investing I learned from experience (the hard way) and reading books.”
What’s even more impressive than the number of pages he has digested is the fact that after reading a veritable library of investing books, his investing philosophy is incredibly simple. He is a staunch believer in the decidedly uncomplicated Three Fund Portfolio.
Who is Taylor Larimore?
Mr. Larimore is a 92-year old gentleman who may be best known for co-authoring the two published Bogleheads books, The Bogleheads’ Guide to Investing and The Bogleheads’ Guide to Retirement Planning. He is very active on the forum, with 23,587+ posts and counting.
In addition to being a prolific reader and writer, Mr. Larimore is also a military hero. He was a paratrooper in the 101st Airborne Division who fought in Bastogne, Belgium in World War II’s famed Battle of the Bulge. He later helped capture Berchestgarden, the home of Adolf Hitler’s mountain retreat, and eventually marched in the Victory Parade on New York City’s Fifth Avenue.
Professionally, he worked as an insurance underwriter, IRS revenue officer, and held positions in the Small Business Administration and Housing Finance Authority in south Florida. Living near the water, he is an accomplished sailor and has been named the American Sailing Association’s “Instructor of the Year.”
I gawked at the lengthy list of books he has read, and marveled at the fact that all that information could be distilled into such a simple recommendation. I knew I wanted to write about it, but I wasn’t about to copy and paste his extensive list without permission.
One of the wonderful things about a community like the Bogleheads is that everyone who frequents the site is easily accessible. I sent Mr. Larimore a message introducing myself. I told him I had an idea for a post and I’d love to borrow his list. He replied within a matter of hours.
Not only did he kindly agree to allow me to use his list of books for this post, he also visited this site, and gave me the following endorsement and the permission to publish it here.
“I found your website to be interesting, informative, and filled with solid investment advice. I especially enjoy reading your “Sunday Best” articles.” -Taylor Larimore
Thank you, kind sir!
What is the Three Fund Portfolio?
The three fund portfolio is a simple portfolio of three passive index mutual funds.
- a total US stock market fund
- a total international stock market fund
- a total bond fund
That’s it. Mr. Larimore has done the hard work, so you don’t have to. I’m not saying you shouldn’t read any of the books that he has read, or any that I might recommend, but you can do a lot worse than buying and holding three funds.
How do you set up a Three Fund Portfolio?
It’s simple but you do have a few decisions to make. You need to decide on a fund family, or do your best to replicate the three fund portfolio based on the funds available in your retirement accounts. Vanguard is an obvious choice, but the Bogleheads wiki gives you options to create a three fund portfolio with nine other fund families, using mutual funds or exchange traded funds (ETFs).
You also need to decide on an asset allocation in terms of percentages. These will be based on your age, risk tolerance, and feelings towards international equities. Allocating one third of your portfolio to each of the three funds is one way, but you can set it up any way you want. For example, you could have 50% US total stock market, 30% total international stock market, and 20% total bond market, or any variation as long as the total is 100%.
What are some alternatives to the Three Fund Portfolio?
Some investors will add an asset class and set up a four fund portfolio. REIT (real estate investment trust) is a popular fourth asset class, and one that I hold in my portfolio.
There are a number of additional “lazy portfolios” detailed in the Bogleheads wiki, which are variations of the three fund portfolio, sharing the common theme of investing in passive index funds holding many stocks and bonds. Some hold two funds, others have as many as nine.
What books has Mr. Larimore read?
This list is a couple years old already, and he has undoubtedly read more in the interim. Nevertheless, he steadfastly stands by his recommendation for a three fund portfolio.
The Affluent Investor, DeMuth The Affluent Investor, Rapport Against the Gods, Bernstein Ages of the Investor, Bernstein All About Asset Allocation, Ferri All About Index Funds, Ferri Only Guide to Alternative Investments You'll Ever Need, Swedroe & Kizer American Sucker, Denby Asset Allocation, Gibson Asset Allocation, Arnott & Fabozzi At the Crest of the Tidal Wave, Prechter Barron’s Guide to Investment Decisions, Sease Battle for the Soul of Capitalism, Bogle (Mis)Behavior of Markets, Mandelbrot & Hudson Beyond Stocks, MerrillBig Investment Lie, EdesessBillion Dollar Funds, Fosbeck Blackwell Guide to Wall Street, BlackwellB ogle on Mutual Funds, Bogle Bogleheads' Guide to Investing, Larimore, Lindauer, LeBoeuf Bogleheads' Guide to Retirement Planning, Larimore, Lindauer, Ferri, Dogu The Bond Book, ThauBusinessWeek Guide to Mutual Funds Can I Retire, Piper Capital Ideas: The Improbable Origins of Modern Wall Street, Bernstein Character Counts, Bogle Charles Schwab’s Guide to Financial Independence, Schwab Choosing an Investment Company, Seligman Clash of Cultures, Bogle Coffeehouse Investor, Schultheis Commonsense Guide to Mutual Funds, Rowland Common Sense Investing, VanNess Common Sense on Mutual Funds, Bogle Complete Idiots Guide to Investing, Koch, DeSalvo, KennonC omplete Idiot’s Guide to Retiring Early, Lee & Flewelling Contrary Investing for the '90s, Band Dun & Bradstreet Guide to Your Investments in 1999 Devil Take the Hindmost, Chancello Devil's Financial Dictionary, Zweig Diversify, Perritt & Levine Discover the Wealth Within You, Edelman Donaghue Stratagies, Donaghue Don’t Count On It, Bogle Dow Jones-Irwin Guide to Mutual Funds, Rugg & Hale Dynamic Asset Allocation, Picerno Dynamic Stock Market Analysis, Carney Elements of Investing, Ellis & Malkiel Enough, Bogle Essential Dictionary of Investment & Finance Eight Steps to Seven Figures, Carlson Economic Time Bomb, Browne ETF Book, Ferri Everything You’ve Heard About Investing is Wrong, Gross Fidelity Guide to Mutual Funds, Rowlands Fifty Ways to Mutual Fund Profits, Levine First Time Investor, Chambers & Rogers Forecasting Financial Markets, Plummer Four Pillars of Investing, Bernstein Fund your Future, Stav & Buccieri Funding Your Future, Clements Get Rich Slowly, Spitz Getting in on the Ground Floor, Leeb Great Mutual Fund Trap, Baer & Gensler Grow Rich Slowly, Underwood & Brown House that Bogle Built, Braham How a Second Grader Beats Wall Street, Roth How Mutual funds Work, Fredman & Wiles How to Buy Mutual Funds the Smart Way, Littauer How to Make Money with Mutual Funds, Markenstein How to Pick the Best No-Load Mutual Funds, Jacobs Hulbert Guide to Financial Newsletters, Hulbert The Incredible Shrinking Alpha, Swedroe & Berkin If you Can, Bernstein Index Fund Solution, Evans Index Funds, Hebner Index Mutual Funds, Maley Index Mutual Funds, Simon Index Your Way to Investment Success, Good & Hermansen Individual Investor’s Guide, AAII Individual Investor Revolution, Carlson Inflation Proofing Your Investments, Browne Informed Investor, Armstrong Intelligent Asset Allocator, Bernstein Intelligent Investor, Graham & Zweig Intelligent Portfolio, Jones Intermarket Technical Analysis, Murphy Investing During Retirement, Vanguard Investing For Dummies, Tyson Investing For a Lifetime, Merriman Investing For a Lifetime, Browne Investing in Uncertain Times, Nichols Investing Made Simple, Piper Investing Mistakes Even Smart Investors Make, Swedroe Investing Strategies For the 21st Century, Armstrong Investment Titans, Burton Investment Fables, Damodaran Investment Fundamentals, Gitman & Joehnk Investment Guru’s, Tanous Investment Mistakes Even Smart Investors Make, Swedroe Investment Policy, Ellis Investments: An Introduction to Analysis & Management, Amling Investor’s Guide to Mutual Funds, Haslem Investor’s Guide to Fidelity Funds, Martin Investor’s Manifesto, Bernstein John Bogle and The Vanguard Experiment, Slater John Bogle on Investing, Bogle Jonathan Clements Money Guide 2015 Keys to Investing in Mutual Funds, Brouwer Kurt Brouwer’s Guide to Mutual Funds, Brouwer Late Bloomer Millionaires, Schullo & Robertson Lazy Person’s Guide to Investing, Farrell Lew Altfest Answers Questions About Money, Altfest Lies Your Broker Tells Your, Slater Little Book of Common Sense Investing, Bogle Little Book of Main Street Money, Clements Little Book of Safe Money, Zweig Live It Up Without Outliving Your Money, Merriman Making It in the Market, CrawfordMaking Money, Ruff Making Money With Mutual Funds, Blitzman & Renburg Making the Most of Your Money, Quinn Man in the Arena, Rostad Managing a Portfolio of Mutual Funds, Rutherford Market Timing With No-Load Mutual Funds, Merriman Marshall Loeb’s Lifetime Financial Strategies, Loeb Mathematician Plays the Stock Market, Paulos Millionaire in You, LeBoef Misbehavior of Markets, Mandelbrot Modern Mutual Fund Families, Anderson & Ross Money Dynamics for the 1990s, Van Casper Money Game, SmithMoney Mantras, Singletary Money Talks: Quotes on Money & Investing, Maggio Money Misery Madness, Weber Money Matters, Strassel Morningstar Guide to Mutual Funds, Benz, DiTeresa, & Kennel Mugged on Wall Street, Chase Multi-Fund Investing, Hirsh Mutual Fund Buyer’s Guide, Fosback Mutual Fund For Dummies, Tyson Mutual Fund Portfolio Planner, Dorf Mutual Fund Superstars, Donoghue Mutual Fund Switch Strategies, Hirsh Mutual Fund Wealthbuilder, Hirsh Mutual Fund Switch Strategies, Boroson Mutual Funds: How to Invest with the Pros, Brouwer Mutual Funds: Taking the Worry Out of Investing, Ross New Contrarian Investment Strategy, Dreman The New Finance, The Case against Efficient Markets, Haugen New Game on Wall Street, Sobel New Money Masters, Train New Mutual Fund Investment Advisor, Dorf New Strategies for Mutual Fund Investing, Rugg New York Times Mutual Fund Guide, Gould No Load Mutual fund Guide, Donoghue No Nonsense Finance, MoodyNo Loads, Kearis One Hundred Best Mutual Funds, Williamson Only Guide to Alternative Investments, Swedroe Only Guide For The Right Financial Plan, Swedroe Only Guide to a Winning Bond Strategy, Swedroe Only Guide to a Winning Investment Strategy, Swedroe Only Investment Guide You Will Ever Need, Tobias Only Other Investment Guide You Will Ever Need, Tobias Only Proven Road to Investment Success, Sengupta Only Retirement Guide You Will Ever Need, Petras Outperforming the Market, Merrill Permanent Portfolio, Browne & Rowland & Lawson Personal Finance for Dummies, Tyson Planning for Retirement, Hallman Planning Your Retirement, Porter Portfolio Selections, Markowitz Power of Passive Investing, Ferri Practicing Financial Planning, Mittra Probability of Fortune, Milevsky Protecting Your Wealth, Ferri Prudent Investor’s Guide to Beating the Market, Bowen & Reinhardt Prudent Investor’s Guide to Beating Wall Street, Bowen & Goldie Prudent Speculator, Frank Quest For Alpha, Swedroe Random Walk and Beyond, Johnson Random Walk Down Wall Street, Malkiel Random Walk Guide to Investing, Malkiel Rational Investing in Irrational Times, Swedroe Retire Secure! For Same-Sex Couples, Lange Retire in Style, Soltesz Retire Rich, Morse Retirement Challenge, Armstrong Road to Stock Market Success, Halpern Roadmap For Investing Success, Keck Safe Investing, Slatter Save Your Retirement, Armstrong & Brown Serious Money, Ferri Smart and Simple Financial Strategies, Quinn Smart Money for the 90s, Money Magazine Editors Smartest 401(k) Book You’ll Ever Read, Solin Smartest Money Book You’ll Ever Read, Solin Smartest Portfolio You’ll Ever Own, Solin Stock Market Logic, Fosback Stock Trader's Almanac, Hirsch Stocks for the Long Run, Seigel Story of Investment Companies, Bullock Straight Talk About Mutual Funds, Vujovich Straight Talk on Investing, Brennan Strategic Investment Timing, Stoken Successful Investing, Babson Successful Investing In No-Load Mutual Funds, Pope Successful Investor Today, Swedroe Successful No-Load Fund Investing, Jacobs Surviving the coming Mutual Fund Crises, Christensen Tactical Asset Allocation, Dubois Take on the Street, Levitt Teenage Investor, Olsen Think, Act, Invest Like Warren Buffett, Swedroe Thirty-Minute Money Solutions, Benz Timing the Market, Weiss Triumph of the Optimists, Dimson Twenty-five Investment Classics, Gough Twenty-Five Myths You’ve Got to Avoid, Clements Ultimate Mutual Funds Guide, Boroson The Unbeatable Market, Ross Unconventional Success, Swensen Unveiling the Retirement Myth, Otar Vanguard Retirement Investment Guide, Vanguard Wall Street Gurus, Brimelow Wealth of Experience, Brennan & Clark Wealth without Risk, Givens We’re Not in Kansas Anymore, Updegrave What Wall Street Doesn’t Want You To Know, Swedroe What Works on Wall Street, Zweig Where are the Customer’s Yachts, Schwed White Coat Investor, Dahle Why Bother With Bonds? Rick Van Ness Why Smart People Make Big Money Mistakes, Belsky Winning in Mutual Funds, SchabackerWinning on Wall Street, Zweig Winning the Losers Game, Ellis Winning With Bonds, Van Ness Winning With Index Mutual Funds, Tweddel & Pierce Winning with Mutual Funds, Editors of Money Magazine Winning with the Market, Sease Winning with New IRA’s, Zweig Winning Portfolio, Farrell Wise Investing Made Simple, Swedroe Wise Investing Made Simpler, Swedroe Yes, You Can Achieve Financial Independence, Stowers Yes, You Can Time the Market, Stein & Demuth Yes, You Can Supercharge Your Portfolio, Stein & Demuth Your Money and Your Brain, Zweig Your Money or Your Life, Cavuto Your Money or Your Life, Dominguez You’re Fifty. Now What? Schwab You’ve Lost It. Now What? Clements You’re Retired, Now What? Yolles
It was a lot of work to link all those books*. I can’t imagine how long it would take to read all those books. Based on the dates of some of them, I can say that the answer in Mr. Larimore’s case is several decades.
I may have many decades of retirement ahead of me, but right now, I don’t have the time to read dozens of books, let alone hundreds. I will gladly take the advice of a well-respected and well-read individual, and keep my portfolio simple.
Do I have a Three Fund Portfolio?
Not exactly. I have chosen to add REIT as an asset class for diversification, and my US stock allocation has a bit of a tilt to small and value stocks. Also, my funds are held in different account types, and holding identical funds in the taxable and tax-advantaged accounts could interfere with my ability to tax loss harvest without triggering a wash sale.
What’s your opinion of a three fund portfolio, or similar “lazy” portfolio? Do you like the simplicity, or do you see pitfalls? Let us know your thoughts below.
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