What is the Coffeehouse Portfolio?
The Bill Schultheis’ Coffeehouse Portfolio can be built with 7 ETFs. It is exposed to between 60% equities and 40% bonds. It is a medium-risk portfolio.
For the past 10 years, the Bill Schultheis’ Coffeehouse Portfolio has returned 9.08 with a standard deviation of 9.76.
The dividend yield is 2.19. The 30-year return is 8.84%.
Year to date the Bill Schultheis’ Coffeehouse Portfolio has returned -9.8%.
- How do you build the Coffeehouse portfolio with ETFs?
- What is the historical return of the Coffeehouse Portfolio?
- Who is Bill Schultheis?
- What is Bill Schultheis’ Coffeehouse Portfolio?
- Asset allocation piechart for Bill Schultheis’ Coffeehouse Portfolio
- ETF allocation for the Three ETF Coffeehouse portfolio
- What are the advantages and disadvantages of the Coffeehouse portfolio?
- Suggestions for your next steps
How do you build the Coffeehouse portfolio with ETFs?
Here is how you build the Coffeehouse portfolios with ETFs
- 10.00% US Large Cap Value (VTV)
- 10.00% US Large Cap (VOO)
- 10.00% US Small Cap Value (VIOV)
- 10.00% US Small Cap (VIOO)
- 10.00% REITs (VNQ)
- 10.00% International All-World ex-US (VEU)
- 40.00% Total US Bond Market (BND)
What is the historical return of the Coffeehouse Portfolio?
Below you can see the return of the Coffeehouse portfolio.
Data was last updated on May 1, 2021 at 08:27 a.m. ET
|Name||Asset class count||Year to date||Return in 2020||10 year return||CAGR since 1989 (%)||Risk level||Expense ratio|
|Bill Schultheis Coffeehouse Portfolio||7||-9.8||7.21||9.08||8.84||2||0.07%|
|Coffeehouse Three ETF||3||-9.76||8.71||8.51||7.9||2||0.15%|
Here is what the table is showing you
Asset class count: This describes how many different asset classes the portfolios consist of.
Year to date: This shows what the portfolio has returned this year starting from the first trading day of the year.
10 Year return: This shows the compounded annualized growth rate over a ten-year period. The current year is excluded from calculations.
CAGR since 1989: This shows the compounded annualized growth rate since 1989. The current year is excluded from calculations.
Risk level: This is the risk level of the portfolio. Level 1 is the least risky and 3 is the riskiest. We measure risk based on the severity of the drawdowns of the portfolio.
Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs.
Please do note that past performance is not a guarantee of future returns.
Who is Bill Schultheis?
Bill Schultheis is a financial adviser and co-founder of the wealth management firm Soundmark Wealth Management. He authored the famous book The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On with Your Life.
We consider him to be one of the good guys in investing. He focuses on the long term, low cost, and, most importantly, doing the right thing for his clients.
“The simplest approach to diversifying your stock market investments is to invest in one index fund that represents the entire stock market.”
– Bill Schultheis
What is Bill Schultheis’ Coffeehouse Portfolio?
In his book, The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On with Your Life Bill Schultheis presents his Coffeehouse portfolio. It has been featured in The New York Times, The Wall Street Journal, TIME magazine, and Marketwatch.com His website describes the use of the investment portfolio.
He stresses that to be successful at investing, you need to:
- Save money
- Diversify your investments
- Use low-cost index funds.
The index portfolio is a variation on the 60/40 investment portfolio, with the stock portion sliced up into smaller allocations.
Asset allocation piechart for Bill Schultheis’ Coffeehouse Portfolio
The even simpler Coffeehouse portfolios
ETF allocation for the Three ETF Coffeehouse portfolio
- 33.33% Total US Stock Market (VTI)
- 33.33% International Value Stocks (EFV)
- 33.33% Total US Bond Market (BND)
What are the advantages and disadvantages of the Coffeehouse portfolio?
- Bill Schultheis’ investment portfolio allocates 20% to value-stocks. Value stocks have historically outperformed growth stocks.
- The portfolio has 20% allocated to small-caps, historically small-caps have outperformed large-cap stocks.
- The Coffeehouse portfolio is a “sleep-well” portfolio. It is less risky than the overall market due to its 40% bond allocation.
- The portfolio has excellent diversification within the U.S.
- Bill Schultheis represents one of the good guys investing.
- The investment portfolio may not have enough international exposure. It only has 10%. This may not be a problem for you. John Bogle is famous for not allocating to foreign stocks.
- Rebalancing of the portfolio could be expensive due to the many funds you need to juggle around every year. This chould not be an issue however as a lot of brokers including Vanguard and Schwab, have removed commissions on stocks and ETFs.
- The 40% bond allocation can drag on your returns.
Bill Schultheis’ YouTube channel.
Bill Schultheis has a very informative Coffeehouse website that he updates regularly.
His wealth management firm is called Soundmark.
Suggestions for your next steps
Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone
If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful.
Rebalancing your portfolio lowers your risk and may provide higher returns in the long run. It is completely FREE.
You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool.
Rebalancing lowers your portfolio risk and can increase your returns.
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