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Lazy Portfolios
Old 10-12-2008, 09:12 PM   #1
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Lazy Portfolios

Just wondering if anyone uses these "Lazy Portfolios" and if so, any comments. Even comments on anyone thinking about redoing there portfolio along these lines.


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Old 10-18-2008, 11:52 AM   #2
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cash,

Your link is messed up. Please try again.

Are you thinking of the Couch Potato portfolios or something similar?
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Old 10-18-2008, 01:07 PM   #3
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Originally Posted by cashflo2u2 View Post
Just wondering if anyone uses these "Lazy Portfolios" and if so, any comments. Even comments on anyone thinking about redoing there portfolio along these lines.

You mean these?
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Old 10-18-2008, 04:18 PM   #4
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Here is an updated matrix with returns:

Invest simple with Lazy Portfolios - MarketWatch.com
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Old 10-19-2008, 11:19 AM   #5
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Margaritaville is the one I have recommend to nieces and nephews. Though now I recommend 2/3 Vanguard's total world market index and 1/3 the TIPS fund.

Margaritaville guides my own portfolio, but I never manage to keep it that simple. For fixed income, I use a TIPS ladder, MM and short-term bond funds instead of just the TIPS fund. On the equity side, I have a mix of index funds with more of a small tilt in the US, more of an emerging/pacific tilt internationally, and a number of legacy individual stocks with unrealized capital gains I don't want to realize yet.
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Old 10-19-2008, 11:29 AM   #6
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I refuse to buy a bond mutual fund so I have the fun of picking CDs for my ladder. I want to know how much I'll have available and when. I don't want my principle to be subject to interest rate risk. I want to know that one June 15, 2011 I'll have $30,000 show up in my account.

As for the equity portion, it is almost all in just a couple index funds.
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Old 10-19-2008, 11:42 AM   #7
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I have been trying to keep my equities 50/50 US/International, but I have added a TIPs fund, foreign bond fund and am now building a 5-year CD ladder in anticipation of retirement, so it is drifting towards the Margaritaville model. My instructions to my wife in case I peg out first include converting the entire portfolio to Margaritaville for simplicity.

I have not been a big fan of bond funds but have been persuaded to include them. It seems to have been a good thing to do. (Old Dutch saying: "We grow too soon old and too late smart.")
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Old 10-19-2008, 08:02 PM   #8
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Sorry, that link did not work. But it seems everybody figured out what portfolios I was trying to get to. I guess they are not all that popular. I'm looking for a cookie cutter portfolio that will do me right for the duration without a lot of worrying.
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Old 10-19-2008, 08:52 PM   #9
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They like to show how well these have held up in the down market, but have they done any back testing in a bull market?
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Old 10-20-2008, 10:12 AM   #10
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Originally Posted by cashflo2u2 View Post
Sorry, that link did not work. But it seems everybody figured out what portfolios I was trying to get to. I guess they are not all that popular. I'm looking for a cookie cutter portfolio that will do me right for the duration without a lot of worrying.
I think you will find the individuals who post regularly to the "FIRE and Money" forum are generally self-selected invest-it-yourself tinkerers. Most of us are constantly studying and talking about improving our investing, because we enjoy doing so. We almost all save a lot on portfolio management fees, and we almost all make investing much more complex than it needs to be.

Imagine a forum for people who rebuild old cars in their garages, to which you post the question: "Should I go to the dealer or to Jiffy Lube to have the oil changed in my brand new car?" Most of the responses would probably be: "Well, I would just change it myself, but I send my MIL/daughter/cousin to ____."

If you want set it and forget it, your basic choices are hire someone, though that can easily cost you 25% of your safe withdrawal annually, or use some variant of the lazy automated portfolios. Personally, if I had just been told I had a brain disorder, and would soon be unable to manage my portfolio, I would put:
  • 64% in Vanguard Total World Stock Index (VTWSX)
  • 32% in Vanguard Inflation Protected Securities (VIPSX)
  • 4% in a Vanguard money market fund
I would tell my wife that whenever the money market fund ran low, she should transfer money from either VTWSX or VIPSX trying to always move the portfolio towards 2 parts VTWSX to 1 part VIPSX. I would also tell her that once a year she should calculate 4% of the portfolio, and compare it with last years 4%. Each year she should not spend more than the greater of the two numbers, and never more than 8% of the current portfolio until she was in a nursing home. Lastly, I would tell her to otherwise just ignore the portfolio regardless of what was in the news, and where anyone told her to invest.

Obviously feel free to use Admiral funds if your portfolio size permits. A 1 part VTWSX to 1 part VIPSX variant is also very reasonable if you want to be more conservative. You can also pick some other lazy portfolio if you prefer.

If pressed, I might even admit that the simple portfolio I describe has a good chance of beating my actual portfolio's performance, and would definitely be less volatile than my actual portfolio. However, I expect to continue tinkering.
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Old 10-20-2008, 01:35 PM   #11
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VTWSX seems kind of new to put all the equity funds into. I almost did with the new VG payout funds and I'm glad I didn't.
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Old 10-20-2008, 02:39 PM   #12
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Originally Posted by cashflo2u2 View Post
VTWSX seems kind of new to put all the equity funds into. I almost did with the new VG payout funds and I'm glad I didn't.
Feel free to use:
  • 1/3 VTSMX
  • 1/3 VGTSX
  • 1/3 VIPSX
if that makes you more comfortable. Because VTWSX is a Vanguard index fund, I don't worry about its youth the way I would with a managed fund or a smaller fund company.
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Old 10-20-2008, 07:01 PM   #13
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Personally, if I had just been told I had a brain disorder ...
One of my last sane acts was to realize I had just such a disorder, when I found Enron in my portfolio circa late 2001.

Since then, I've reformed my ways and become a set-it-and-forget-it kind of guy.

Sing it with me ...

"Lazy.

I just want to be lazy.

How I long to be out, in the sun, with no work to be done ... "
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Old 10-21-2008, 06:06 AM   #14
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Here is an updated matrix with returns:

Invest simple with Lazy Portfolios - MarketWatch.com
Interesting - "Ultimate Buy & Hold" portfolio did the best of these over the past 1, 3, & 5 years (+3.99 over 5 years)

32% intermediate & short term Treasuries & 8% VIPSX - seems that 40% really helped shelter it from the storm.

Anybody doing that one?
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Old 10-22-2008, 04:11 AM   #15
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One of my last sane acts was to realize I had just such a disorder, when I found Enron in my portfolio circa late 2001.

Since then, I've reformed my ways and become a set-it-and-forget-it kind of guy.
Enron was my last individual stock buy. When they went into the first part of their death dive, I looked at their assets and figured that their pipelines and other hard assets would keep their breakup value above $15. I bought a bunch at $8. I never sold. I guess you could say I'm waiting for the rebound.

After that, I went from being about half indexer to 100% index. I still have a small amount of BAC that I haven't sold because of a large capital gain. It's still positive but I might move my after tax index funds around a little to capture the tax loss and cover the gain on my BAC.
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Old 10-22-2008, 09:25 AM   #16
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I wonder if DVFAX, that is relatively new also, would be an excellent addition to portfolio at this point.
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Old 01-03-2012, 08:11 AM   #17
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When I look at the Lazy Portfolios, some of them have so many funds in them, that they seem to be creating their own Total World Index Fund.
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Old 01-03-2012, 09:29 AM   #18
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Though my percentages are different. I'm closest to the Second Grader Starter portfolio.
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Old 01-03-2012, 09:34 AM   #19
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I suspect many here have portfolios that resemble the lazy portfolios, with an eye on minimizing expenses and taxes. Mine is a subtle variation on William Bernstein's The Four Pillars or Investing, close to two shown by the link but not exactly the same as any. They all have their place, you may put your own spin on them (as I am sure we all do) but the lazy portfolios are fundamentally similar.
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Old 01-03-2012, 09:42 AM   #20
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As I've said here before, I am basically 100% VFIAX/VTSMX and have been so in my investments for years. I do have some cash in an emergency fund and the kids' college funds are a mixture of VxxxX and those target funds. I also have some private stock in a former employer, but will convert that to VxxxX as soon as they do their IPO (or delete it from Quicken and take the capital loss if they go bankrupt.)

No individual stocks, no options, no commodities, no actively managed mutual funds, no trading.

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