The Bogleheads’ Guide to the Three-Fund Portfolios, shows how a simple portfolio of three total market index funds outperforms most investors with less risk.
The three-fund portfolio is simply:
A total U.S. stock index fund A total international stock index fund A total bond market index fund “Total,” in this case, means owning large, midsized and small company stocks. The S&P 500, for example, is a large-company stock index of 500 companies. A total stock U.S. market index is a broad-based index of U.S. stocks, big, midsized and small, including more than 4,000 company stocks.