He Has Read Over 250 Investing Books. He Recommends These Three Funds.

vista-staffing-250x250-001
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.”

He goes on to list the investing books he has read. Mr. Larimore has read more investing books than I have read Dr. Seuss, Eric Carle, and Little Golden Books combined. Color me impressed.

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.”

 

DSC_7404

 

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
The Simple Path to Wealth, Collins
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.

That being said, my portfolio is rather simple compared to most, and will likely become simpler when I graduate from my medical career and begin the early retirement phase of my life.

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.

*Most of the links are Amazon affiliate links. If you buy something via any of the Amazon links, you will be supporting this site and its charitable mission.

 

 

Subscribe for Free Calculators & More!

No spam guarantee.

24 comments

  • The Green Swan

    My vanguard funds consists of a large cap and small cap instead of the total market fund so that I have a bit more discretion between the two. And then the third vanguard fund I item is the international one and the majority of my investments are held in these three. I don’t own any bonds or bond funds so my portfolio is a bit more aggressive in that respect. I’m a big fan of these three funds and I will continue to put a bigger chunk of my money in them going forward.

  • Taylor Larimore is the man responsible for convincing me to adopt the 3 Fund Portfolio. Glad to see another Bogglehead here and what a nice post singing Mr. Larimore’s praises.

  • Hatton1

    Wow. More books to read!!!!

  • I’m all about a lazy portfolio (that I can watch/manage) rather than paying the big fees! How cool that he returned your message and checked out your site. Thanks so much for sharing the book list too! I am sure readers will love that!

    • Me, too, Vicki!

      I think “lazy” is a bit of a misnomer. You still need to be willing to do it yourself, including rebalancing and learning enough to trust that you are indeed doing yourself a favor. I like that others including Mr. Larimore have done exhaustive research and settled on such a simple, repeatable approach.

      Cheers!
      -PoF

  • I am a big advocate of the lazy portfolio. I only use two of the funds (I believe I’m too young to use bonds, as my investment horizon is so long). Once I get closer to FIRE, I’ll reevaluate that position. I tend to stress over the details, so investing in individual stocks or real estate with tenants, is just NOT for me. Have to find what helps you sleep at night while also helping you accomplish your financial goals.

    • I’m with you, Fervent Finance. I’ve been an accidental landlord on a couple places that we moved away from, and it can be more hassle than it’s worth (especially long-distance as we were). Individual stocks would involve far too many little decisions about when to buy or sell, capture gains, or cut your losses. Not my style. I’ve got better ways to spend my time.

      Best,
      -PoF

  • Great post. Taylor Larrimore is my favorite Boglehead. His posts inspire me all the time, especially as it concerns simplicity. Following his investment gems on the Bogleheads Forum, I have read over 100 investing books in the last 3 years. One of the remarkable things I learnt from him was that he never checks his rate of return on his investments. According to him, he just captures the market with his index funds and accepts their return. So he has no need to track his personal returns as he will do nothing with that information. That blew my mind. I adore Mr. Larrimore….and he always has time to send private messages to fellow Bogleheads (he has sent 3 to me personally when I had some private questions). He reminds me of that quote: “Simplicity is the ultimate sophistication”

    • You’ve given yourself quite an education! At that pace, you could knock out every book on this list within a decade. Of course, you probably don’t need to revisit those from the eighties and nineties, but there are new books (and new editions) being released all the time.

      I still like to track my personal returns (using Personal Capital) to know my net worth and look for tax loss harvesting opportunities. When I’m retired and presumably in great financial shape, perhaps I’ll pay less attention to the day-to-day fluctuations.

      It’s great to hear you’ve had pleasant interactions with Mr. Larimore. His advice seems to be spot-on. I hope I’m half as sharp in 52 years. Or at least pulsatile. 🙂

      Best,
      -PoF

  • Wow, what work to get those books linked! Impressed. Like wealth building, you have to put in some serious work to get the results.

    We like simple. My 401k is two funds, a total US stock market and a bond fund. Mrs. PIE 401k would be the same if it was not for the choices available to her in her 401k. She has 4 funds that essentially maps to the two fund lazy portfolio. Our taxable is four funds that we are tidying up into what will be a two or three fund approach. We buy into the concept of major US companies having international exposure anyway so don’t have a distinct international fund. Jim Colins has written at length on this.

    At separation from service and FIRE in two years, we will roll over our 401ks into Vanguard where our taxable account sits.

    As has been discussed in other forums recently, we would be happy to take 5-6% returns. That is all we need to protect our assets and align with our SWR of < 4%.

    Enjoy reading your stuff. Please keep it up.

    • Yeah, Ctrl-C and Ctrl-V got a serious workout on the old keyboard.

      I see you’re also on board with the “lazy” portfolio. The international stock question is a good one. John Bogle himself has said you can go without. There’s a current 4-page thread on the topic on the Boglehead forum.

      I imagine I’ll be doing the same, rolling the 401(k) over to a Vanguard IRA where I’ll be able to make Roth conversions annually. I’m lucky to have Vanguard fund options in my tax-deferred accounts with Transamerica.

      Best,
      -PoF

      • Thanks for the link. And perhaps not surprising, the take on it by Taylor Larimore is high quality. I feel fine about not going with international fund(s).

  • My goodness that’s a lot of links! Very cool that Mr. Larimore is so hip with technology. I’m also slowly turning away from my active stock picking days – simply don’t have the time anymore. “Lazy” may be the way to go!

    Keep up the good work!

    • No doubt. I had that “it seemed like a good idea at the time” moments when I was less than halfway through that task.

      And yes, as others have noted, he is very responsive. I actually messaged him initially sometime in the wee hours as I was up thanks to the pager. He had responded by 0800.

      Keep up the good work yourself!
      -PoF

  • Anonymous

    I believe there is a four fund portfolio as well.

    • Yes, adding REIT or other alternative investment gives you the 4 Fund portfolio, one of my “lazy portfolio” favorites.

      • Anonymous

        So is ER still a good idea with this recent downturn in the markets? Should one wait till the market has gone back up or is more stable. For example when stocks are not as over valued?

        I’m 48 now and close to 4 mil if I count rental property.

        • This recent downturn has decreased my aggressive portfolio by about 5%. I wouldn’t be at all surprised if it dropped 10% or 20%. Most years see a correction of 10% at some point. A couple bad days don’t concern me.

          Also, withdrawal rates of 3% to 4% have been backtested and work out even when retiring at the worst times.

          If I was planning to withdraw 4% and had a 50-year time horizon, I might be hesitant to retire in this bull market, the 3rd longest in history.

          I’m shooting for 40x to 50x expenses, and most people will rightfully say that’s overkill. It is, but I’m not at all desperate to leave my job, and I should be able to go from 25x to 40x or 50x in about five years. For me, that’s a good tradeoff.

          • Anonymous

            50x? So 2% to 2.5% (40X). That would mean you need 4 mil to get 100K. After taxes that would be anywhere between 80 to 90 K. So around 7 to 7500 per month. That seems a bit low. I guess with part time work and later SS it works out.

            Personally I’m getting tired of the risk of medicine and the headaches that come with it. But if I could find something I enjoyed with less risk I could go another 10 to 12 years.

          • Anonymous

            On another note. If you have some cash some time this week would be a good week to buy.

          • I did some exchanges today, tax loss harvesting in my taxable account. I’ll receive my biweekly direct deposit and will be buying on Friday.

            Only time will tell if now is the time. If we have a quick rebound, then yes. If this is the beginning of the bear market that’s been widely predicted starting in about 2011, maybe not. I’m no market timer. I’ll DCA and invest monthly, and take what the markets give me.

  • Richard Shumway

    I’m over 250 too. It helps to have been retired for over 25 years. My “fixed” income is about 2.5 times current expenses, I feel I have “enough”, and invest over half my income in VTSAX & VWALX at a (16/84) allocation. I like the floor approach discussed in Retirement Portfolios by Zwecher. Following Bogle my investments are US focused, tax efficient, and still not used for any retirement expenses. My investments are for the unexpected and, knock-on-wood, have done well through the past black swans.

    • Strong work! I don’t think anyone would argue that you don’t have Enough, or more than Enough, with fixed income more than double your annual spending.

      I have not read Zwecher’s book (or anywhere near 250), but it sounds like you subscribe to the concept of not playing the game once you’ve already won. 84% bonds — would you happen to be 84 years old?

      Best,
      -PoFEnough

Leave a Reply

Your email address will not be published. Required fields are marked *