A three-fund portfolio is a popular, low-cost, and simplified investment strategy consisting of three broad-based index funds or ETFs: a total domestic stock market fund, a total international stock market fund, and a total bond market fund. It offers maximum diversification with minimal maintenance, popularized by investors aiming to track the overall market.
A three-fund portfolio is a portfolio which uses only basic asset classes — usually a domestic stock "total market" index fund, an international stock "total market" index fund and a bond "total market" index fund.
As with any approach to investment, there are also downsides to the three-fund portfolio. By choosing just three asset classes, you miss out on wider diversification with other alternative asset types that may not be included in tradition or popular investment funds.
The best three-fund portfolio for beginners is likely a combination of a domestic stock ETF, a global stock ETF, and a total bond market ETF. Consider your brokerage's family of funds for an easy way to start.
Equities have a higher potential for growth even though more volatile in the short-term as compared to hybrid and debt funds. A well-diversified equity fund is more likely to offer stable growth over the long-term.
Key Takeaways. A basic three-fund portfolio includes a US equity index fund, an international-equity index fund, and a total bond market index fund. It can be an exchange-traded fund portfolio or a traditional index portfolio. Simplicity is a major selling point for three-fund portfolios.
The four main types of funds, categorized by underlying assets, are Equity Funds (stocks), Bond/Fixed-Income Funds (debt), Money Market Funds (short-term debt), and Hybrid Funds (mix of stocks and bonds), with variations like Index Funds (passively track an index) and ETFs (trade like stocks) being common options within these categories or as separate types.
While no single ETF perfectly mirrors Warren Buffett's entire portfolio, several ETFs track his principles (quality, value, moats) like VanEck Morningstar Wide Moat ETF (MOAT), iShares MSCI USA Quality Factor ETF (QUAL), and iShares Russell 1000 Value ETF (IWD), with Berkshire Hathaway's own holdings also including general market ETFs like SPDR S&P 500 ETF Trust (SPY) and Vanguard S&P 500 ETF (VOO). A newer option, VistaShares Target 15 Berkshire Select Income ETF (OMAH), directly mirrors Berkshire's top holdings with an options overlay for income.
And to go one step further, we recommend dividing your mutual fund investments equally between four types of funds: growth and income, growth, aggressive growth, and international.
To make $3,000 a month ($36,000/year) from investments, you need a significant lump sum or consistent, high-yield income streams, with estimates ranging from roughly $300,000 at a 12% yield to over $700,000 for stable Dividend Aristocrats, depending on your investment type, dividend yield, risk tolerance, and strategy. A simple formula is: Investment Needed = ($3,000 x 12) / Annual Dividend Yield.
Understanding AIF Category 3
In simple terms, these funds don't just buy and hold stocks like mutual funds. Instead, they actively trade in listed and unlisted securities and often invest in the derivatives market. This approach creates opportunities for higher returns, but it also entails greater risks.
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).
A three-fund portfolio is an investment portfolio built using just three broad asset classes. In practice, this means holding three funds: a U.S. stock index fund, an international stock index fund, and a bond index fund. Each fund is a low-cost index fund that tracks a significant portion of the market.
Here are the best low-risk investments in 2025:
The "7-3-2 Rule" refers to two main concepts: a financial strategy for wealth building, suggesting it takes 7 years for the first major savings milestone, 3 years for the next, and 2 years for the third, driven by compounding and increasing investments; and a trucking rule (7/3 split) allowing drivers to split their 10-hour mandatory break into 7 hours in the sleeper berth and 3 hours of off-duty rest, offering flexibility.
How To Turn $1,000 Into $10,000 in a Month
So, we put together nine ideas to help you plan your investment strategy.