slowsaver
Recycles dryer sheets
I just finished reading the 4 Pillars book by William Bernstein, and I have a question. I know a lot of you have read it, so maybe you can help me with what I missed ...
Most of the book seemed to be convincing the reader to just buy the "whole" market, when it comes to your US Stock investments. Messing around with anything else just leads to lower-than-market performance over the long term. He even gave an example story about "Charlie Cringe" should invest 35% of his money into the Total Market, "not just the S&P 500."
But when you get to the last section of the book, there are several more examples of asset allocations based on different circumstances. In these examples, he doesn't include the "total market" fund in any of them. Instead, he recommends a mix of the following 4 funds:
S&P500, Vang Value Idx, Vang Small Cap, Vang Small Cap Value
The examples he gave from the above list (same order):
Wendy Wonk: 10%, 10%, 5%, 7.5% (total 32.5%)
Sheltered Sam: 20%, 5%, 15%, 10% (total 50%)
Young Yvonne: 12%, 15%, 3%, 9% (total 39%)
I do understand why these 3 examples have a different total amount of US stock (more bonds for safety, etc.), but I don't feel like there was enough explanation why the above 3 examples would not just go with 32.5%, 50%, and 39% Total Market, respectively. And, why these particular mixes?
... I have a feeling the answer to this might require reading another book.
Most of the book seemed to be convincing the reader to just buy the "whole" market, when it comes to your US Stock investments. Messing around with anything else just leads to lower-than-market performance over the long term. He even gave an example story about "Charlie Cringe" should invest 35% of his money into the Total Market, "not just the S&P 500."
But when you get to the last section of the book, there are several more examples of asset allocations based on different circumstances. In these examples, he doesn't include the "total market" fund in any of them. Instead, he recommends a mix of the following 4 funds:
S&P500, Vang Value Idx, Vang Small Cap, Vang Small Cap Value
The examples he gave from the above list (same order):
Wendy Wonk: 10%, 10%, 5%, 7.5% (total 32.5%)
Sheltered Sam: 20%, 5%, 15%, 10% (total 50%)
Young Yvonne: 12%, 15%, 3%, 9% (total 39%)
I do understand why these 3 examples have a different total amount of US stock (more bonds for safety, etc.), but I don't feel like there was enough explanation why the above 3 examples would not just go with 32.5%, 50%, and 39% Total Market, respectively. And, why these particular mixes?
... I have a feeling the answer to this might require reading another book.