A Three-Fund Portfolio for Conservative Investors
A simple, low-maintenance portfolio built around broad market index funds and a meaningful bond allocation.
A three-fund portfolio holds one total US stock market fund, one total international stock market fund, and one total bond market fund. It is cheap, diversified, and easy to rebalance.
A conservative example
For someone who wants less volatility than a 100% stock portfolio:
- 40% total US stock market index fund
- 20% total international stock market index fund
- 40% total US bond market index fund
This allocation still has equity exposure for long-term growth, but the 40% bond sleeve reduces swings.
Expected behavior, not expected returns
No one can guarantee returns. What you can predict is behavior: when stocks fall, the bond portion will likely fall less or hold steady, which makes it easier to rebalance by selling bonds and buying stocks without panicking.
Rebalancing once a year
Once a year, check whether your allocation has drifted more than 5 percentage points from the target. If it has, sell the overweight asset and buy the underweight one. This is the only trading most three-fund investors need to do.
Trusted Funds publishes general information only. Nothing here is personalised financial, tax or legal advice.
