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Comment by jedberg | Hacker News Reader

I just back tested this to 2012. If you put $10,000 in in 2012, and just invested in the S&P500, you'd have $23,046. If you just did VTI (Vanguard Total Stock Market), you'd have $22,754. If you do 60% domestic and 40% international (VTI and VXUS) you'd have $19,325. If you did the recommended 3 stock portfolio (VTI 42%, VXUS 18%, and BND 40%) you'd have $16,668.

So while they all made money, the three portfolio made the least money. Unfortunately the Vanguard ETFs don't go back before the last recession, otherwise it would be interesting to see how the numbers invert.

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Saying a portfolio allocation of 100% stocks 0% bonds outperformed 60/40 during the longest bull run in history is shortsighted. Here's a more thorough analysis - https://finpage.blog/2017/01/04/three-fund-portfolio-2016-up...

It's interesting that the 20y compound return are pretty close. I don't understand the STDev value in the tables, and it is not explained. Is that the the standard deviation of the annual returns?

The last few years are an outlier -- the US had a historic bull run and international stocks underperformed significantly. The point of the 3-fund is that it's a solid strategy no matter what the market looks like.

Yeah if I can find the data I'd back test further, but I suspect you'd be right.

https://www.portfoliovisualizer.com/backtest-asset-class-all...

You can backtest it there. BTW 100% stock will likely beat the stock+fund, but at the cost of higher volatility (which can be an issue if you need the money eg during retirement)

I really like this site for backtesting different mixes: https://portfoliocharts.com/portfolios/

A big part of that is that the average punter knows nothing, and that approach is likely to avoid losses.

When people go all VTI, they tend to freak out when the market goes down, sell near the bottom and forget about it, only to buy it again after the value goes up.

You are giving the average punter too much credit. If they could time the bottom like that, you could harness them to beat the markets.

It's easy to pick in retrospect but the 3 fund portfolio also carried less risk and will probably win in the longer term. Which one wins over the past 3 months? :)

Seven years is a short window in the span of a lifetime.

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