Build Bogleheads Three Fund Portfolio With ETFs
What is the Three Fund Portfolio? The three-fund portfolio is a lazy portfolio that consists of …
What is the Couch Potato portfolio?
The Couch Potato portfolio is built with 2 ETFs. It holds two asset classes. The portfolio is exposed to 50% bonds and 50% equities.
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How do you build the Couch Potato portfolio with ETFs?
Here is how you build the Couch Potato portfolios with ETFs.
50.00% US Total Stock Market (VTI)
50.00% TIPS (VTIP)
The letters in brackets denote the stock symbol for the recommended ETF. You can look up the symbols at your stockbroker. You can see a listing of all the ETFs we recommend on this page.
You can find more details about the Couch Potato portfolio including its drawbacks and more advanced ways of constructing a Couch Potato portfolio below.
What is the historical return for The Couch Potato Portfolio?
Below you can see the historical return for the Couch Potato portfolio.
Portfolio data was last updated on 11th of November 2022, 11:40 ET
| Name | Year to date | Return in 2021 | 10 year return | CAGR since 1989 (%) | STDEV | Draw Down | Expense ratio | Yield |
|---|---|---|---|---|---|---|---|---|
| Scott Burns Couch Potato | -13.37 | 15.52 | 9.49 | 9.05 | 9.57 | -19.88% | 0.04% | 0.71 |
Here is what the table is showing you
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.
Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs.
Yield: This is the expected dividend yield of the portfolio.
Please note that past performance is not a guarantee of future returns.
How does the Couch Potato portfolio compare to the best portfolios?
Below you can see the returns of the best portfolios that we have benchmarked.
| Name | See Portfolio | Year to date | Return in 2021 | 10 year return | CAGR since 1989 (%) | Draw Down |
|---|---|---|---|---|---|---|
| Premium Portfolio |  | -20.97 | 32.14 | 13.2 | 11.81 | -35.43% |
| Premium Portfolio | | -18.7 | 28.78 | 16.52 | 11.28 | -37.63% |
| Premium Portfolio | | -19.64 | 25.67 | 16.29 | 11.25 | -37.00% |
| Premium Portfolio | | -23.99 | 13.49 | 11.03 | 11.21 | -44.87% |
| Premium Portfolio | | -12.0 | 28.17 | 14.47 | 11.14 | -35.26% |
| Premium Portfolio | | -14.9 | 24.75 | 11.85 | 10.99 | -36.46% |
| Premium Portfolio | | -14.79 | 29.02 | 13.15 | 10.99 | -40.85% |
| Premium Portfolio | | -20.6 | 20.7 | 11.45 | 10.93 | -37.91% |
| Premium Portfolio | | -15.12 | 24.51 | 11.87 | 10.88 | -36.35% |
| Premium Portfolio | | -19.38 | 22.92 | 14.99 | 10.85 | -32.77% |
What is the Couch Potato portfolio?
The Couch Potato Portfolio is one of the Lazy Portfolios, which means it is easy to implement and maintain while producing a respectable return. Our articles Lazy Portfoliosand 5 Reasons Why A Lazy Portfolio Is Right For Youhighlight the benefits and pitfalls of lazy portfolios.
The Couch Potato Portfolio by Scott Burns is one of 9 portfolios that he has constructed. The other Scott Burns portfolios are:
The Couch Potato Portfolio
Margarita Portfolio
Four Square Portfolio
Five-fold Portfolio
Six Ways from Sunday Portfolio
Seven Value Portfolio
Seven Value 2 Portfolio
Nine Emerging Portfolio
10 Speed Portfolio
You can see all these portfolios in our article Scott Burns The 8 Other Couch Potato Portfolios.
The difference between the portfolios is the number of asset classes and risk each portfolio takes on.
The Couch Potato Portfolio has two asset classes. The number of asset classes increases from there as you go down the list. The 10 Speed Portfolio has ten asset classes.
You can find the asset allocations of all the portfolios right here on portfolioeinstein.com under Scott Burns The 8 Other Couch Potato Portfolios.
You can also check out Scott Burn’s assetbuilder site, where they are listed as well.
Performance of the nine portfolios by Scott Burns can be found under Investment Portfolios and Scott Burns The 8 Other Couch Potato Portfolios.
Below is Scott Burns explaining how simple investing works.
Who is Scott Burns?
Scott Burns is a former financial columnist at the Dallas Morning News. He also co-founded Assetbuilder.com which uses The Couch Potato portfolio as an underlying portfolio.
I love going back to Scott Burns’ website and reading his insights into personal finance and investing. Scott Burns’ advice on personal finance follows the same path as his advice on investing. Personal finance needs to be straightforward. If you want to read more by Scott Burns, you can find many of the best articles on his website.
What is the Couch Potato portfolio?
The Couch Potato portfolio holds two asset classes. They are TIPS and a total US stock market ETF:
TIPS, treasury inflation-protected securities
A total US stock market allocation
The couch potato portfolio is straightforward to maintain and is also very cheap to hold.
It is also conservative because it holds 50% of its allocation in very safe bonds, which are inflation-protected. The bonds are TIPS.
It stands for Treasury Inflation-Protected Securities. It is an allocation that is fit for retirees as they need to protect their capital while younger investors can take on more risk. The younger investors can hold more of their allocation in stocks.
If you are a younger investor, you want to hold a higher allocation of stocks in your portfolio.
What are some clever alternatives to the Couch Potato portfolio?
There are many alternatives to the Couch Potato portfolio. The most similar are the balanced portfolios. The balanced portfolio consists of a bond allocation and a total US stock market. The balanced portfolios exist with various allocations. The allocations range from 90% stocks and 10% bonds, and all the way to the opposite, 90% bonds and 10% stocks. An added benefit of the balanced portfolios is that you can build a Socially Responsible Investment portfolio from the balanced portfolio recipe. You can read more about socially responsible portfolios in our post here.
We have benchmarked all balanced portfolios, so you can quickly get an overview of how a particular stock/bond allocation affects your portfolio.
You can find them all in our article The Balanced Portfolio: Portfolio Grand Daddy
Another alternative to the Couch Potato is the Three Fund Portfolio. This portfolio adds a third and probably wise allocation to international stocks. You can find more on the Three Fund Portfolio in our article Three Fund Portfolio: Did Awesomeness Find Trinity?
What is the asset allocation for The Couch Potato portfolio?
50.00% US Total Stock Market (VTI)
50.00% TIPS (VTIP)
What are the advantages and disadvantages of the Couch Potato portfolio?
Here are the advantages of the Couch Potato portfolio
The Couch Potato portfolio has done well compared to the market.
The Couch Potato portfolio is super easy to implement – only two funds, and you’re done!
The Couch Potato portfolio has a low draw-down because it has 50% in bonds.
It is an excellent portfolio that you can later build upon using other model portfolios from Scott Burns.
The Couch Potato investment portfolio is easy to understand, build, and easy to re-balance.
The Couch Potato has many options for tweaking the asset allocation.
Here are the disadvantages of the Couch Potato portfolio
The Couch Potato portfolio lacks international exposure. To get international exposure, you need to step up the ladder to the Margarita Portfolio. You could also look at one of the Three Fund Portfolios.
The 50% bond (TIPS) allocation can drag down your returns.
What are some similar portfolios to the Couch Potato portfolio?
The Couch Potato portfolio is a great portfolio. Simple and effective. Here are a few similar portfolios to the Couch Potato portfolios:
Check out the balanced portfolios, e.g. 50% stocks, 50% bonds.
The Jack Bogle portfolio – total stock market index fund and a bond fund.
JL Collins Wealth Preservation portfolio – 90% Total stock market fund and 10% bond fund.
The Three Fund portfolio by the Bogleheads – adds international exposure. It is detailed in the article Three Fund Portfolio, Did Awesomeness Find Trinity?
The recent book by Tailor Larimore explains the virtues and advantages of the three-fund portfolio very eloquently.
The Bogleheads’ Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk
Where can I learn more about the Couch Potato portfolio?
Scott Burns maintains a beautiful and informative website over at Couch Potato Investing
Find over 1000 articles on the topic of the Couch Potato
If you are Canadian why not look up Canadian Couch Potato
Suggestions for your next steps
Finding the right portfolio is hard. Maintaining your portfolio is also daunting.
If you want access to our high-performing portfolios then you want to take a look at the premium portfolios.
This is a paid product that gives you the 20 best-performing portfolios since 1989. The portfolios represent a great opportunity low-cost for you to get more money from your investment portfolios. We think it’s a no-brainer. The 20 portfolios are the best among the literally hundreds of other portfolios we have benchmarked since we started.
You stand to gain thousands more dollars EACH YEAR for the price of a few months of Netflix.
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.
Related questions
What is a 50/50 portfolio?
A 50/50 portfolio has 50% in stocks and 50% in bonds. It is also called a balanced portfolio.
What does an aggressive portfolio look like?
An aggressive portfolio holds more than 75% stocks.
What is the most aggressive investment?
The most aggressive investment is an all 100% stock portfolio. Some asset classes have greater returns than others. You can find the most aggressive portfolios on our overview page
