If you’re an investor who craves simplicity and low cost above all else, Vanguard has you covered. Long recognized as the industry’s low-cost leader, these affordable, broadly diversified ETFs make for ideal core portfolio building blocks.
Vanguard does it so well, in fact, that you can own virtually the entire global stock and bond markets with just two ETFs.
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Let’s put aside for a minute the idea of how much of your portfolio is in technology, artificial intelligence (AI), or the Great Seven stocks. Instead, let’s focus on building the ultimate “set-it-and-forget-it” portfolio. With these two Vanguard ETFs, your portfolio couldn’t get much simpler.
of the Vanguard Total World Stock ETF (NYSEMKT: VT ) Essentially all of the US and international equity markets in one single fund. Owning more than 10,000 stocks in total, it offers a mix of approximately 65% US, 25% developed markets, and 10% emerging markets stocks. With an expense ratio of only 0.06%, it is one of the cheapest ways to own property in the world.
of the Vanguard All Global Bond ETF (NASDAQ: BNDW ) It’s a simple 50/50 combination Vanguard Total Bond Market ETF and d Vanguard Total Global Bond Market ETF. In total, it has positions in more than 18,000 bonds and charges only a 0.05% expense ratio.
If you want to use the old-fashioned 60/40 portfolio as your benchmark, this two-ETF combination will look roughly the same.
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39% of US stocks
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21% global stock
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20% US bonds
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20% international bonds
That’s not a bad combination for conservative investors, but your mileage may vary. Given the returns over the past few years, many investors may prefer to keep their bond allocations to a minimum. Or they want to show some fixed income for other things like gold or Bitcoin.
Alternatively, a 90/10 allocation would look like this.
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59% US stock
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31% global stock
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5% US bonds
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5% international bonds
Today’s risk-averse investors may find a 90/10 allocation a little more attractive. It maintains equity exposure as part of a long-term mix and overweights currently hot international stocks. Plus, you can achieve this with just two very affordable Vanguard ETFs, making it incredibly easy and straightforward.
