couch potato investing.

[frank]

I was reading about couch potato investing on asset builder.com and thought it was interesting. what is the general consensus on this type of investment? Are there major pitfalls to this?

[pb4uski]

No, it works well. I think you will find that many of us do some version of it. With target date funds available today it can be easier, but my couch potato portfolio for the last 5-10 years has been principally 45% Vanguard Total Stock Market Index (domestic equities), 15% Vanguard International Stock Index (international equities) and 40% Vanguard Total Bond.

With today's low interest rates I have deviated on the bond side into intermediate corporate, GNMA and high yield to reduce duration and increase yield, but if I was a couch potato I would just go Total Bond.

[donheff]

Quote:

Originally Posted by pb4uski No, it works well. I think you will find that many of us do some version of it.

+1

[Midpack]

Quote:

Originally Posted by pb4uski No, it works well. I think you will find that many of us do some version of it. With target date funds available today it can be easier, but my couch potato portfolio for the last 5-10 years has been principally 45% Vanguard Total Stock Market Index (domestic equities), 15% Vanguard International Stock Index (international equities) and 40% Vanguard Total Bond.

Quote:

Originally Posted by donheff +1

+2. Many here (self incl) have portfolios that closely resemble Scott Burns 'couch potato' approach. For someone who can't/won't be bothered to choose an asset allocation, select funds, and rebalance with some discipline - IMO the couch potato or another lazy portfolio is the next best choice and maybe even every bit as effective.

Those of us who slice and dice a little further from couch potato, can only expect to get slightly better returns and/or lower risk, not an orders of magnitude improvement.

[frayne]

Some good rules for the lazy portfolio investors;

Invest Simple with Lazy Portfolios - MarketWatch.com

[nun]

Quote:

Originally Posted by pb4uski ......... my couch potato portfolio for the last 5-10 years has been principally 45% Vanguard Total Stock Market Index (domestic equities), 15% Vanguard International Stock Index (international equities) and 40% Vanguard Total Bond. With today's low interest rates I have deviated on the bond side into intermediate corporate, GNMA and high yield to reduce duration and increase yield, but if I was a couch potato I would just go Total Bond.

I have a similar portfolio, mostly Vanguard Total Stock Market, Bond Market, Wellesley and Intermediate Investment Grade Bond Index. I arranged things in a 45/45/10 AA until recently when I got off the couch and moved some equities into fixed income.

[Bluemoon]

I have compared my own slice and dice (conservative) portfolio to the 3 VG - 62% Total Bond/27% Total Stock/11% Total Int'l) for quite a while and I have consistantly outperformed it. If it was even close I would have probably switched to the 3 fund AA.

[Midpack]

Quote:

Originally Posted by Bluemoon I have compared my own slice and dice (conservative) portfolio to the 3 VG - 62% Total Bond/27% Total Stock/11% Total Int'l) for quite a while and I have consistantly outperformed it. If it was even close I would have probably switched to the 3 fund AA.

By how much out of curiousity? Or even better how much and how's your volatility compare (std dev if nothing else)? I slice and dice hoping I can outperform by 1-2% at most, or same returns with lower volatility.

[pb4uski]

Quote:

Originally Posted by Bluemoon I have compared my own slice and dice (conservative) portfolio to the 3 VG - 62% Total Bond/27% Total Stock/11% Total Int'l) for quite a while and I have consistantly outperformed it. If it was even close I would have probably switched to the 3 fund AA.

Can you give us details of the issues and relative percentages of the total? and how/why you chose them?

[Bluemoon]

My AA is:

CDs - 10%
IBonds - 5%
TCW Core Fixed Income (TGCFX) - 14%
VG Shrt Term Bond Indx Adm (VBIRX) - 7%
Weitz Short-Intermediate Income (WEFIX) - 8%
VG Wellesley Adm (VWIAX) - 38%
Yacktman (YACKX) - 13%
Oakmark Int'l I (OAKIX) - 5%

Every fund that I own I watched for a long time before buying. VWIAX & VBIRX I have owned for some years.

I don't have the S/D for the total portfolio, M* rates the risk of Wellesley Below Average and all of the others as Average, obviously there is no rish involved with the CDs & IBonds.

My portfolio has outperformed the 3 fund as follows:

2011 - +6.43% vs +3.95%
2009 - +23.68% vs +14.25%
2008 - -9.48% vs -9.65%
3yr - +11.34% vs +8.74%
5yr - +5.97% vs +3.74%
10yr - +6.79% vs +5.29%

My partner's portfolio (which I set up this year) has performed fairly similar to mine and if that continues for the rest of the year I will switch to it myself in December when I rebalance. Her AA is 74% bonds & cash/26% stocks. Her portfolio consists of:

29% CDs
27% VG Tgt Retirement Income (VTINX)
44% VG Wellesely ADM (VWIAX)

[Midpack]

Quote:

Originally Posted by Bluemoon My portfolio has outperformed the 3 fund as follows: 2011 - +6.43% vs +3.95% 2009 - +23.68% vs +14.25% 2008 - -9.48% vs -9.65% 3yr - +11.34% vs +8.74% 5yr - +5.97% vs +3.74% 10yr - +6.79% vs +5.29%

Thanks and congratulations, I'm duly impressed. I need to calculate how my porfolio compares to a standard Vanguard 3-fund with an equivalent AA, though I'm certain my results will not match yours. Nicely done...