The Bogleheads Guide To A Three Fund Portfolio
What you will learn
Explain the three broad asset exposures and how allocation and rebalancing manage portfolio drift.
Read and apply
Read the The Bogleheads Guide To A Three Fund Portfolio book page (opens in a new tab)
On the book page, choose one idea relevant to the objective above. Write what evidence would support it and what could weaken it. Then complete the filing or source activity below and return to these course questions.
Check your understanding
Choose an answer, then open the feedback.
What are the three broad fund exposures in the book’s portfolio example?
A. US stocks, international stocks and bonds. B. Three technology stocks. C. Cash, options and futures.Show answer and feedback
A. The three-fund model uses broad US stock, international stock and bond exposures; the mix still depends on circumstances.
What should guide the mix among those exposures?
A. Yesterday’s winner. B. Risk capacity, time horizon and goals. C. A guaranteed return table.Show answer and feedback
B. Allocation is a planning decision, not a forecast of which asset will lead next.
What does rebalancing do?
A. Guarantee a gain. B. Remove all volatility. C. Bring weights back toward a chosen target.Show answer and feedback
C. Rebalancing controls drift; it can involve costs and taxes and cannot prevent losses.
Why question: Why can a simple three-fund mix still lose value?
Show a sample explanation
Stocks and bonds can both fluctuate, and diversification does not ensure a profit. The allocation changes the risk mix without eliminating risk.
Try an allocation change
Open the course allocation calculator. Open the course allocation calculator with its age-35, moderate-risk, long-horizon, balanced-goal and $50,000 defaults. Record its stock, bond and cash mix, then change only risk to Conservative and compare the result. The model is educational, not a personal allocation recommendation.
Key takeaways
- The three-fund model uses broad US stock, international stock and bond exposures; the mix still depends on circumstances.
- Allocation is a planning decision, not a forecast of which asset will lead next.
- Rebalancing controls drift; it can involve costs and taxes and cannot prevent losses.
This activity is for financial education. An example or book framework does not guarantee investment results.
AI responses are for educational purposes. Always verify with official course materials.
This lesson teaches a concept. It is general education, not advice about your money. Before you act on anything you learn here, speak to someone licensed.
AI responses are for educational purposes. Always verify with official course materials.
This lesson teaches a concept. It is general education, not advice about your money. Before you act on anything you learn here, speak to someone licensed.
This lesson teaches a concept. It is general education, not advice about your money. Before you act on anything you learn here, speak to someone licensed.
