Three-Fund Portfolio Builder

What a three-fund portfolio is

A three-fund portfolio holds three broadly-diversified, low-cost index funds that together cover the entire investable market: a US total-market stock fund, a total-international stock fund, and a US total-bond fund. The approach was popularized by Taylor Larimore and the Bogleheads community and is documented in the Bogleheads "Three-fund portfolio" wiki. Three funds, held in proportion to your targets, give you global diversification, low costs, and a simple portfolio to maintain.

This builder answers the construction question: given a total dollar amount, how much goes into each fund? To then align an existing portfolio with a new target, use the Portfolio Rebalancing Calculator, which takes current balances and a target and outputs the exact buy/sell trades.

The two decisions — stock/bond split, then US/international split

Building a three-fund portfolio requires exactly two percentage decisions:

1. Stock/bond split (equity %). How much of your portfolio is in stocks versus bonds. This is your primary risk lever: more equity means higher expected long-run growth and higher short-term volatility; more bonds reduces volatility and provides a buffer. This tool takes the equity percentage as a direct input — it does not derive it from your age (that is a separate task, handled by age-based glide-path rules).
2. US/international split (US share of equity). Of the equity sleeve, how much is US stocks versus international stocks. The three sleeve percentages fall out exactly from these two numbers: US stock = equity% × US share; international stock = equity% × (1 − US share); bonds = 100% − equity%.

Every number in the results table is derived from these two inputs and your total — no assumptions, no projections, no models.

Reference allocations — context, not advice

There is no single "correct" US/international split. Three named reference points are commonly discussed, each with a documented rationale. This tool offers them as one-click presets that set the US equity share — they are context, not recommendations.

• Vanguard global-market-cap (60% US / 40% international of the equity sleeve). Vanguard has increased its international allocation in its Target Retirement and LifeStrategy funds over time: from approximately 20% of the equity sleeve when those funds launched, to 30% around 2010, to the current 40% in 2015 — reflecting the growth of international markets relative to US markets as measured by global market-cap weighting. This is still the current allocation as of the last-reviewed date.
• Bogleheads / Larimore classic (70% US / 30% international of the equity sleeve). At a 60/40 stock/bond split, this produces the canonical 42% / 18% / 40% portfolio commonly cited on the Bogleheads forum and in Taylor Larimore’s writing.
• US-only / Bogle-style (100% US, 0% international). John Bogle himself argued that US companies already derive significant revenue internationally, making a separate international allocation unnecessary. The Bogleheads community’s consensus has moved toward holding some international, but many investors choose US-only and Bogle’s rationale remains a reasonable position.

Source for all three: Bogleheads "Three-fund portfolio" wiki. Last reviewed: June 2026. The right split for you depends on your risk tolerance, time horizon, views on currency risk, and home-country bias — factors this tool cannot weigh.

The math — a worked example (Bogleheads 42/18/40)

The canonical Bogleheads three-fund portfolio uses a 60/40 stock/bond split with 70% US and 30% international of the equity sleeve. At $100,000:

Equity % = 60%
US share = 70% (of the equity sleeve)

US stock % = 60% × 70% = 42% → $42,000
Intl stock % = 60% × 30% = 18% → $18,000
Bonds % = 100% − 60% = 40% → $40,000

Total: $42,000 + $18,000 + $40,000 = $100,000 ✓

This is the authoritative validation case for the calculator, sourced directly from the Bogleheads wiki. The three amounts sum to exactly the total — not approximately, exactly — because the tool uses integer-cent reconciliation: each sleeve is rounded to the nearest cent and any one-cent residual from rounding is assigned to the largest sleeve.

Cent-exact arithmetic

Three dollar figures rounded independently can sum to one cent off the total (for example, three equal sleeves of $10,000 each round to $9,999.99 before reconciliation). This tool avoids that: it works in integer cents, rounds each sleeve, computes the residual (totalCents minus the sum of the three rounded values), and assigns it to the largest sleeve. The three displayed amounts are guaranteed to sum to the exact total you entered.

The four-fund variant

A common extension adds a fourth sleeve: a total-international-bond fund (e.g. BNDX at Vanguard, FBIIX at Fidelity). This adds international interest-rate diversification and some currency exposure to the bond sleeve. The four-fund portfolio is not built as a control in this tool — it is noted here so you know what to search for if you want it. The three-fund version is the Bogleheads community’s primary recommendation.

What this tool does not do — and why

• Nothing is modeled. No expected returns, inflation, growth projections, or backtests. The numbers are exact arithmetic on your inputs. A tool that projects future values must make assumptions about returns, and every assumption is another way the number can be wrong.
• The stock/bond split is your input; this tool does not derive it from age. Age-based rules (110-minus-age, 120-minus-age, target-date glide paths) are a separate calculation. Once you have a target equity percentage from those rules or your own judgment, enter it here.
• No tax or account-type modeling. Where you hold each fund (taxable, traditional IRA, Roth IRA, 401(k)) affects after-tax returns via asset location, but this is not modeled — it requires per-account detail and tax-rate assumptions.
• Representative funds are examples, not recommendations. Expense ratios are omitted to avoid annual staleness — verify the current expense ratio and fund details at the fund company before purchasing.

How to use this with the Rebalancing Calculator

This builder sets your target. The Portfolio Rebalancing Calculator shows you how to get there from your current holdings:

1. Step 1 — Build your target here. Set your total, equity %, and US equity share. Read off the three target percentages.
2. Step 2 — Enter current balances in the Rebalancing Calculator. Use the percentages from Step 1 as your targets and enter what you actually hold. The Rebalancing Calculator outputs the exact buy/sell trades and handles contribution mode (directing new cash to underweight funds first) and Swedroe 5/25 drift bands.

Sources: Bogleheads: Three-fund portfolio · Vanguard: How to build a three-fund portfolio

Last reviewed: June 2026. Fund tickers and reference allocations are subject to change; verify before purchasing.

This tool is for informational and educational purposes only. It is not financial, tax, or legal advice, and does not constitute a recommendation to buy or sell any security. Every investor’s situation is different. Consult a qualified financial professional before making investment decisions.