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 93-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 26,684 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!
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What is the Three Fund Portfolio?
- 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 (although no longer the lowest cost), 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?
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, BernsteinAges of the Investor, BernsteinAll About Asset Allocation, Ferri All About Index Funds, FerriOnly Guide to Alternative Investments You'll Ever Need, Swedroe & KizerAmerican Sucker, Denby Asset Allocation, Gibson Asset Allocation, Arnott & FabozziAt the Crest of the Tidal Wave, PrechterBarron’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, DoguThe Bond Book, ThauBusinessWeek Guide to Mutual FundsCan 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, SchultheisCommonsense 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, ChancelloDevil's Financial Dictionary, ZweigDiversify, Perritt & Levine Discover the Wealth Within You, Edelman Donaghue Stratagies, DonaghueDon’t Count On It, BogleDow Jones-Irwin Guide to Mutual Funds, Rugg & Hale Dynamic Asset Allocation, PicernoDynamic 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 & RogersForecasting Financial Markets, PlummerFour Pillars of Investing, BernsteinFund your Future, Stav & Buccieri Funding Your Future, ClementsGet Rich Slowly, Spitz Getting in on the Ground Floor, Leeb Great Mutual Fund Trap, Baer & GenslerGrow Rich Slowly, Underwood & BrownHouse that Bogle Built, Braham How a Second Grader Beats Wall Street, Roth How Mutual funds Work, Fredman & WilesHow 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, JacobsHulbert Guide to Financial Newsletters, HulbertThe 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, AAIIIndividual Investor Revolution, CarlsonInflation Proofing Your Investments, BrowneInformed Investor, ArmstrongIntelligent Asset Allocator, Bernstein Intelligent Investor, Graham & ZweigIntelligent Portfolio, Jones Intermarket Technical Analysis, MurphyInvesting During Retirement, Vanguard Investing For Dummies, Tyson Investing For a Lifetime, Merriman Investing For a Lifetime, Browne Investing in Uncertain Times, NicholsInvesting Made Simple, Piper Investing Mistakes Even Smart Investors Make, SwedroeInvesting Strategies For the 21st Century, ArmstrongInvestment Titans, Burton Investment Fables, DamodaranInvestment Fundamentals, Gitman & JoehnkInvestment 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, BrouwerLate Bloomer Millionaires, Schullo & RobertsonLazy 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, ClementsLittle Book of Safe Money, ZweigLive It Up Without Outliving Your Money, MerrimanMaking It in the Market, CrawfordMaking Money, Ruff Making Money With Mutual Funds, Blitzman & Renburg Making the Most of Your Money, QuinnMan 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, LeBoefMisbehavior of Markets, Mandelbrot Modern Mutual Fund Families, Anderson & Ross Money Dynamics for the 1990s, Van CasperMoney Game, SmithMoney Mantras, Singletary Money Talks: Quotes on Money & Investing, MaggioMoney Misery Madness, WeberMoney Matters, Strassel Morningstar Guide to Mutual Funds, Benz, DiTeresa, & KennelMugged on Wall Street, ChaseMulti-Fund Investing, Hirsh Mutual Fund Buyer’s Guide, FosbackMutual Fund For Dummies, Tyson Mutual Fund Portfolio Planner, Dorf Mutual Fund Superstars, DonoghueMutual Fund Switch Strategies, Hirsh Mutual Fund Wealthbuilder, HirshMutual Fund Switch Strategies, Boroson Mutual Funds: How to Invest with the Pros, BrouwerMutual Funds: Taking the Worry Out of Investing, RossNew Contrarian Investment Strategy, DremanThe New Finance, The Case against Efficient Markets, HaugenNew Game on Wall Street, Sobel New Money Masters, Train New Mutual Fund Investment Advisor, Dorf New Strategies for Mutual Fund Investing, RuggNew York Times Mutual Fund Guide, Gould No Load Mutual fund Guide, DonoghueNo Nonsense Finance, MoodyNo Loads, Kearis One Hundred Best Mutual Funds, Williamson Only Guide to Alternative Investments, SwedroeOnly Guide For The Right Financial Plan, SwedroeOnly Guide to a Winning Bond Strategy, Swedroe Only Guide to a Winning Investment Strategy, SwedroeOnly Investment Guide You Will Ever Need, TobiasOnly Other Investment Guide You Will Ever Need, TobiasOnly Proven Road to Investment Success, SenguptaOnly Retirement Guide You Will Ever Need, PetrasOutperforming the Market, Merrill Permanent Portfolio, Browne & Rowland & Lawson Personal Finance for Dummies, TysonPlanning for Retirement, Hallman Planning Your Retirement, Porter Portfolio Selections, MarkowitzPower of Passive Investing, FerriPracticing Financial Planning, Mittra Probability of Fortune, MilevskyProtecting Your Wealth, Ferri Prudent Investor’s Guide to Beating the Market, Bowen & ReinhardtPrudent Investor’s Guide to Beating Wall Street, Bowen & GoldiePrudent Speculator, Frank Quest For Alpha, Swedroe Random Walk and Beyond, JohnsonRandom Walk Down Wall Street, MalkielRandom Walk Guide to Investing, Malkiel Rational Investing in Irrational Times, SwedroeRetire Secure! For Same-Sex Couples, LangeRetire in Style, SolteszRetire Rich, Morse Retirement Challenge, ArmstrongRoad to Stock Market Success, HalpernRoadmap For Investing Success, Keck Safe Investing, SlatterSave Your Retirement, Armstrong & Brown Serious Money, Ferri The Simple Path to Wealth, Collins Smart and Simple Financial Strategies, QuinnSmart Money for the 90s, Money Magazine EditorsSmartest 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, SeigelStory of Investment Companies, BullockStraight Talk About Mutual Funds, VujovichStraight Talk on Investing, BrennanStrategic Investment Timing, Stoken Successful Investing, Babson Successful Investing In No-Load Mutual Funds, PopeSuccessful Investor Today, Swedroe Successful No-Load Fund Investing, JacobsSurviving the coming Mutual Fund Crises, ChristensenTactical Asset Allocation, Dubois Take on the Street, LevittTeenage Investor, OlsenThink, Act, Invest Like Warren Buffett, Swedroe Thirty-Minute Money Solutions, BenzTiming the Market, WeissTriumph of the Optimists, DimsonTwenty-five Investment Classics, Gough Twenty-Five Myths You’ve Got to Avoid, ClementsUltimate Mutual Funds Guide, BorosonThe Unbeatable Market, RossUnconventional Success, SwensenUnveiling the Retirement Myth, OtarVanguard Retirement Investment Guide, VanguardWall Street Gurus, BrimelowWealth of Experience, Brennan & ClarkWealth without Risk, GivensWe’re Not in Kansas Anymore, UpdegraveWhat Wall Street Doesn’t Want You To Know, SwedroeWhat Works on Wall Street, ZweigWhere are the Customer’s Yachts, SchwedWhite Coat Investor, Dahle Why Bother With Bonds? Rick Van NessWhy Smart People Make Big Money Mistakes, BelskyWinning 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 MagazineWinning with the Market, Sease Winning with New IRA’s, Zweig Winning Portfolio, FarrellWise Investing Made Simple, Swedroe Wise Investing Made Simpler, Swedroe Yes, You Can Achieve Financial Independence, Stowers Yes, You Can Time the Market, Stein & DemuthYes, You Can Supercharge Your Portfolio, Stein & Demuth Your Money and Your Brain, ZweigYour 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
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.
For further reading on the three fund portfolio, check these out:
- He Has Read Over 250 Investing Books. He Recommends These Three Funds.
- From 28 Funds to 3: Simplifying to a Three Fund Portfolio
- A Vanguard Three Fund Portfolio Just Got Cheaper!
- Investing in a Three Fund Portfolio Across Numerous Accounts. Get the Spreadsheet!
- The Bogleheads Guide to the Three Fund Portfolio