3-fund portfolio (Bogleheads): allocation, funds, and setup

Three funds. That is all you need to own virtually every publicly traded stock and bond on the planet. The Bogleheads 3-fund portfolio is the most recommended investing strategy on Reddit, personal finance blogs, and the Bogleheads forum itself. It works because it is simple, cheap, and diversified.

The three funds

1. US Total Stock Market — covers ~4,000 US companies, from Apple to tiny startups
2. International Stock Market — covers ~8,000 companies outside the US (Europe, Asia, emerging markets)
3. US Bond Market — government and corporate bonds, providing stability and income

That is the entire portfolio. No sector funds, no REITs, no gold, no crypto. Three funds, rebalanced once or twice a year.

Exact fund picks by brokerage

Asset class	Vanguard	Fidelity	Schwab
US Stocks (mutual fund)	VTSAX (0.04%)	FSKAX (0.015%)	SWTSX (0.03%)
US Stocks (ETF)	VTI (0.03%)	FSKAX*	SCHB (0.03%)
International (mutual fund)	VTIAX (0.12%)	FTIHX (0.06%)	SWISX (0.06%)
International (ETF)	VXUS (0.08%)	FTIHX*	SCHF (0.06%)
Bonds (mutual fund)	VBTLX (0.05%)	FXNAX (0.025%)	SWAGX (0.04%)
Bonds (ETF)	BND (0.03%)	FXNAX*	SCHZ (0.03%)

*Fidelity's mutual funds can be bought and sold like ETFs with zero minimums. The expense ratios are nearly identical across all three brokerages. Pick whichever brokerage you already use.

How to split the three funds

The allocation depends on your age and risk tolerance. Here are common splits:

• Aggressive (20s-30s): 60% US stocks, 30% international, 10% bonds
• Moderate (40s): 50% US stocks, 20% international, 30% bonds
• Conservative (50s-60s): 35% US stocks, 15% international, 50% bonds

The international percentage is debated. Jack Bogle himself recommended 0% international — he believed US companies already have global revenue. Most Bogleheads today recommend 20-40% international for geographic diversification. The global stock market is roughly 60% US and 40% international by market cap.

For age-specific guidance, see our allocation by age chart.

Why only three funds?

More funds does not mean better diversification. VTI alone holds ~4,000 stocks. VXUS holds ~8,000 international stocks. BND holds ~10,000 bonds. With three funds you own about 22,000 securities across the entire investable world.

Adding sector funds (technology, healthcare, energy) just overweights sectors you already own through VTI. Adding REITs overweights real estate that is already in VTI at market weight. Simplicity is a feature, not a limitation.

Setting it up: step by step

1. Open an account at Vanguard, Fidelity, or Schwab (or use your existing 401k/IRA).
2. Decide your allocation. Write down your target percentages for each fund.
3. Buy the three funds. Split your investment according to your target. If investing $10,000 with a 60/20/20 split: $6,000 in VTI, $2,000 in VXUS, $2,000 in BND.
4. Set up automatic contributions. Dollar cost averaging each paycheck into the same three funds.
5. Rebalance once a year. Check your allocation with our portfolio visualizer. If any fund drifts more than 5% from target, rebalance.

3-fund portfolio vs. target date fund

A target date fund (like Vanguard Target Retirement 2060) holds the same three asset classes and rebalances automatically. The trade-off:

• 3-fund advantage: Slightly lower expense ratio. Full control over allocation. Tax-loss harvesting is possible.
• Target date advantage: Zero maintenance. Automatically shifts to more bonds as you age. One fund, one purchase, done.

If you want to set it and forget it completely, a target date fund is fine. If you want to control your exact split and save a few basis points, the 3-fund portfolio is the way.

Related tools

• Portfolio Visualizer — chart your 3-fund allocation
• DCA Calculator — plan recurring investments
• Compound Interest Calculator — project 3-fund growth over decades
• FIRE Calculator — see when you can retire