The Fratboy Investor’s Lazy Portfolio
I am a huge fan of Swenson’s Yale Portfolio. It’s simple, doesn’t require many funds and has beaten the S&P500 in good and bad times. One thing I don’t like about it are bonds. Fratboy Investor’s are young. We don’t need bonds yet. Lets take a look at how a Fratboy would invest in the Yale Portfolio:
- 45% – Total US Stock Market
- 35% – Total International Stock Market
- 20% – REIT’s
Three funds to rule them all. Thats how I like it. If you are investing completely for retirement then stick these funds into your Roth IRA and 401k accordingly. If part of your portfolio is used as long-term savings then keep reading:
Taxable Account: Total US Stock Market and Total International Stock Market
Why: Cuz’ your momma said so. Just kidding – because they tend to be tax efficient. You can get tax credits for holding international funds.
Roth IRA: REIT’s
Why: REIT’s are notoriously tax in-efficient. You don’t want to pay taxes if you’re going to buy and hold
401k: Total US/Total International and REIT’s
Why: If you can invest in REIT’s in your 401k do it. Most 401k’s don’t offer REIT’s which is why they usually live in Roth IRA’s.
Thats it. The Yale Portfolio has returned 10%+ in the past five years, beating the S&P every time. Past performance isn’t a good indicator of future performance, but investing in diverse asset’s sounds solid to me. Throw in 20% bonds when you get older. Get back to me in 10 years. Invest on.
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Tags: asset allocation, lazy portfolio, portfolio, swenson, yale
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