What’s Poppin’,

This is the Master Money Newsletter where we make you smirk while reading a newsletter about money.

Then your friend says “Who are you texting?”

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Here’s what we have on deck today:

• How has the S&P 500 performed against the traditional 3-fund portfolio?
• 4 Side Hustles that nobody is talking about.
• How Much do you need to earn to be rich?
• Read the Book of the week.

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Most Index Fund investors will call the 3-fund portfolio the holy grail of diversification.

Heck, they even hold the 3-fund portfolio in target-date retirement funds. It is one of the most common asset allocations there is.

But, we also know how strong returns have been for the S&P 500. If you have been here for any amount of time you know I pound the table on that juicy 10% historic rate of return.

So this got ya boi thinking. How would the infamous 3-fund portfolio perform against the S&P 500?

After all, Uncle Warren Buffet doesn’t hold all 3 funds. Why is that? I think we have the answer.

If you don’t know what a 3-fund portfolio is, then it probably means you are not an Index Fund Pro student. ​

I will give you the quick low down here.

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​Typically in a 3-fund portfolio, you hold:

• US-Based Stocks
• International Stocks
• Bonds

This can be with any percentages that fit your asset allocation. Today we will look at this from one of the most common asset allocations. The 50/30/20 portfolio. I am going to use one of my favorite brokerages Vanguard for this model.

Shout out to the index fund OG’s.

To model this out I am using one of my favorite tools Y-charts. It is pricey for the average person but they do have a 7-day free trial if you want to check them out (not an affiliate).

Here is what the portfolio will consist of:

VTSAX - ​​Vanguard Total Stock Mkt Idx Adm - 50%

VTIAX - Vanguard Total Intl Stock Index Admiral - 30%

VBTLX - Vanguard Total Bond Market Index Adm - 20%
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Here is the performance of the 3-Fund Portfolio Vs. The S&P 500

There is close to a 2% difference all-time in total return. Over the last 20 years, it is a difference of 1.87% to be exact.

Why? Mainly because the International Fund and Bond Fund have significantly underperformed the S&P 500.

This has a huge impact on your money.

How much? Let’s take a look:

If you invested $1,000 a month, here is how much you would have after 20 years with a 3-fund portfolio:

Now here is how much you would have with the S&P 500:

You may be thinking that isn't so bad. I feel warm and cozy with the extra diversification.

Welp, over 30 years it gets even worse.

Here is the 3-Fund Portfolio:

Here is the S&P 500:

The difference here is $654,919.55.

Do you see why stop worrying about your daily coffee and instead focus on the things that matter?

For funsies, let’s look at more recent returns over the last decade.

There is still a case to be made for the 3-fund portfolio in the future. But, recent historic results show it may be better to veer closer to the Warren Buffet Index Portfolio.

If you want to learn more about this and how you can optimize your portfolio make sure you check out Index Fund Pro! It is our step-by-step course that will teach you how to invest and build the best portfolio for you.

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High-Performance Book Club 📚

I get a ton of questions from listeners and readers as to what I am reading. So we decided to let you know via the newsletter. The High-Performance Book Club will be a way to share this. If you want to be Elite in your career, business, or wealth, welcome to the club. If you would like to see our previous picks, you can find them here.

​Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk​

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The Personal Finance Podcast 🎙️ ​ ​

​How Much Income Do You Need to Be Considered Rich? (By Age!)​

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This information is purchased by data brokers online! You want to get this information off of the internet to significantly reduce the odds of your information being used for financial fraud.

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To do this, I use DeleteMe. They will contact data brokers to remove your information from their database. This saves the average person 80+ hours per year! To get 20% off DeleteMe use this link! ​

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Youtube

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​4 Side Hustles That Nobody is Talking About in 2023! ($1,000+ a month!)​

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