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Friday, November 5, 2010

Kiplinger's "Best Simple Portfolio"

Kiplinger's "The Best List" has a number of interesting entries this month, among which is their "Best Simple Portfolio"." In line with the theme of this site, it is comprised of low cost funds:

33% VTSMX Vanguard Total Stock Market
33% VGTSX Vanguard Total International Stock Index
33% VBMFX Vanguard Total Bond Market

This portfolio, as they point out, beats most investors. In fact, over some longer periods, similar types of portfolios, after fees, have been shown to beat 90% of active professional investors who tout their stock-picking and market-timing abilities.

Kiplinger's reports that, over the past 10 years, it has achieved an annualized return of 3%. Year-to-date through 11/4, it is up 11.14%.

I agree with Kiplinger but would prefer to use exchange traded funds and flesh out the portfolio a bit with a few extra funds. Also, the portfolio has to be adjusted for risk tolerance specific to particular investors. In any even,t investors can easily adapt the "simple portfolio" to use as a benchmark to assess how well they or their advisor is performing.

1 comment:

  1. Admiral shares pretty much have the same expense ratios as the ETFs. Since Vanguard lowered the minimum to $10K, it is easier for the average Joe to get the lowest costs.