Best 3 ETF Portfolio Buy & Hold FOREVER (BEST Simple Investing)

There's an incredibly simple and incredibly effective three fun portfolio that I built out a decade ago and introduced to YouTube in 2021. Since then, hundreds of YouTubers have borrowed my portfolio. You know who you are. And I understand why. It's the best way to invest on the planet. And literally anyone can do it because it keeps things so simple. Yet, it's beat the S&P 500 alone consistently. And honestly, I don't even care that they stole it. I'm just happy that people are getting the knowledge and actually making it so that they can hit their financial freedom faster and with less stress because that's the whole point and why I made this YouTube channel. So, back in the day, Jack Bogle came up with the old school three fund portfolio over about 40 years ago, but I updated it and enhanced it years ago, and now I've updated even that for 2026 and 2027. In this video, I'm going to give you not only what I think is the most simple and most effective investing strategy on the planet, but also the exact portfolio allocation based on your age and your life stage. So, you can do this all by yourself, get very rich doing it, and never pay anybody a fee to do it for you. Because here's the thing, your 401k is very likely still following that old school method. It worked 40 or 50 years ago, but things have changed and now it's time to change your portfolio to meet the times. I'm an actual university professor and so I teach students this all day, but also I consult with thousands of clients yearly to work on their specific portfolio strategy and consistently I've seen so many people have left so much money on the table by investing incorrectly. So, in this video, I'm going to quickly go over the new three fund portfolio that updates Jack Bogle's strategy. I'll also give you the specific ETFs that work for 2026 and 2027. Then, I'll explain exactly how I'd set up the percentages with actual data. Now, I've made a version of this video last year, but right now in 2026 and definitely in 2027, there's a couple of updates and one specific big change that I want you to pay attention to. And now, this is one of those videos that I want you to be able to just actually sit and watch. This is going to be a bit longer of a video, but I promise you, if you can understand not just what I'm saying, but why, that's going to help you long term much more than you think. My name is Nolan Goa. My students call me Professor G, and I made this channel to make investing simplified. Remember that all investing carries risk, so do your own research. This is not financial advice and I'm not a financial adviser. Now, back in the day, Jack Bogle had this idea that if somebody wanted to be invested as close to perfectly as possible, they need to be diversified as much as possible. You've probably heard your whole life that you need to have some stocks and you need to have some bonds. But if you're invested in bonds right now and you look at your portfolio, you've probably thought, why the heck do I have these things? They don't even move. Bogle's answer was that bonds are your protection in case of a market downturn. If the stock market drops, your bond should keep at least a portion of your portfolio safe. People that love bonds are going to point to the last decade or a long-term crash as to why you should hold bonds in your portfolio. Those big sustained crashes have happened a handful of times in the life of the stock market. But why are we holding our portfolio down just for that small portion of time that could happen at some point? We're holding our portfolio down instead of that opportunity for growth because it might drop. Just because it statistically rains 10 days out of the entire year, should you always walk around with an umbrella up just in case? No. This makes no sense. Market cycles are a normal thing. If you've been invested for any period of time, you know we usually get eight to 10 good years, then one to two bad years where the market has a correction or a reset, and then it goes right back into a good decade or so. So why would it be logical to set up such a big chunk of your portfolio so heavily protected for that one bad year? And because of that, you miss out on 10 years of very, very good growth. Now, if you're well established, your money's grown as far as you'd like it to grow, or you're just in retirement, and you need that actual sustainability, then yes, it's important to have some money outside of the stock market and just be safe. And I'll get to that. But how you invest to reach financial freedom is much different than how you're invested while in financial freedom. So, to optimize your portfolio best, you need to understand the three fund portfolio methodology first. Then I'll show you how we updated this new three fund portfolio and how we take that actual old school strategy but just update it for the times because right now is so much different than when that strategy was built out. The old three fund portfolio was a portion in US stocks, a portion in international and a portion in bonds. The whole point was to spread across different parts of the market and something outside the market so that if one part dropped, the other two would help hold your portfolio up. If stocks crashed, at least the bond portion would be safe and stable. And this worked very well until it stopped working. In 2022, the S&P 500 dropped a good amount. Dropped about 18% for the year, which is not fun at all. And bonds are supposed to be that hedge. If the stock market drops a bunch, we're expecting the bonds to at least hold their ground or maybe even go up. So, let's look at 2022 and what happened with bonds there. Wait, what? It dropped like a rock. The biggest bond ETF out there, BND, lost about 13% in 2022. Stocks down 18, bonds down 13 in the very year bonds were supposed to save you. That's insane. Now, here's the 2026 update because right now bonds are all the rage because people are saying like now they're coming back up. The Fed cut rates three times at the end of 2025 and bond prices did bounce. BND made about 7% in 2025 and recently in 2026 it went up a bit too but more recently it's actually dropped a bit but let's zoom out because that's what matters for the portfolio. We're doing this for long-term investing and for sustainable investing not for any one year. Back in August of 2020, BND hit its all-time high of about $8959 a share. Today, six years later, it's under $72. That's still about 20% below its high. BND is supposed to be the safest, most stable part of the entire portfolio, and it's still nowhere near where it was six years ago. Look at the returns. BND's three-year average, and that's the good stretch, the one with the rate cuts in it, is about 4% per year. The 5 years, basically at zero, actually negative. And the 10-year is about 1.4% per year. 10-year average of 1.4% per year. What are we doing? With inflation running at 3.4% right now, a fund that averages 1.4% a year for a decade is not protecting your money. It's losing it slowly. So now bonds were traditionally a very safe portion of the portfolio, at least back in the day, because it was something smart to hold during things like the dot bubble and the financial crisis. But things have changed and we see that in the old three fund portfolio, bonds were the safe section. US stocks were the foundation where you'd expect the market average. That's about 8 to 10% per year. But now that third section that was supposed to be the highest risk and the highest reward that was international stocks and international is where the story gets a bit interesting because in 2026 and last year specifically 2025 they actually did quite well. But do we still need an international ETF today? The rest of the world outside of the United States is a very big place. And it did make a lot of sense to hold something or exposure outside of the United States. New and emerging markets, companies that if they grew to even close to as big as some of the ones in the United States, that's where you would profit a bunch. And back then, that did make a lot of sense. The risk was higher because we're talking about foreign governments that play by their own rules and places that aren't yet established or at least weren't as established back then. And because you're taking that risk, that should have potential to beat the S&P 500. Now, another thing here, a lot of people believe that just by investing in international, the reason you're doing that is so that you can invest outside of the United States, just so that it gives you a little bit more safety. So, you're outside the United States. They think that if the US drops, maybe international is going to go up. But what's that saying? If the United States sneezes, the rest of the world catches a cold. If there's a drop in the United States, there tends to be a drop elsewhere in the international as well, especially long-term. But even more importantly, business just isn't done the same way as it was in the 70s and 80s. And that's the most important thing to understand right now. I've said this before, but back then to gain market share in Germany or China or across Europe, a company had to physically set up shop there. So back then, investing by geography made sense. Nowadays, after the internet and modern logistics, basically every big company is global. I have students buying and selling from Asia while sitting in my lecture. I just had a call with somebody in Dubai the other day. So technically sitting right here in the United States, I took market share from Dubai. Apple takes market share from every country on the planet. Starbucks sells coffee on every corner of the earth. You don't need an internationalonly fund to get international exposure within your portfolio. Roughly 40% of the revenue in the S&P 500 already comes from outside the United States. And the fact of the matter is over the long run, international ETFs just underperform. But I do have to be fair here. In 2025, International did beat the S&P 500. VXUS, one of the most famous and most invested in international ETFs out there, returned about 32% in 2025, but that was one good year after about a decade of lagging. So let's look at what matters for your portfolio that we're trying to build for 20 40 years, not just looking at it for any one year. Over the past 10 years, VXUS averaged about 9.7% per year. And that's with the monster 2025 year baked in. Better than it used to be, but still pretty weak sauce because the S&P 500 alone did about 15.4% a year over the same stretch. So, the part of the portfolio that's supposed to be the highest reward in your portfolio has spent a decade losing to the boring foundational portion. And I'll show you in a minute what the growth alternative did over those same 10 years because that comparison is the whole reason for this video. So, let me be clear, international is not a bad asset. And if you just want to have a portion of it in your portfolio just to say that you're diversified, go for it. I have a lot of clients that do choose to have international. I'm just saying that business has been done differently recently and for the foreseeable future and there's just a better place to be putting that money. If you're going to be risking it anyway, you might as well actually get the reward. So, let's talk about my new three fund portfolio because this takes the actual correct strategy from back in the day from Jack Bogle and updates it with the correct funds for 2026. So, number one is the same as Bogle, a foundational broad US index. That's an ETF that tracks the S&P 500 like VU, SPY, or SPYM, or one that tracks the total US stock market like VTI. These are all extremely cheap. VU and VTI charge 03%. Over the past 10 years, the S&P 500 averaged about 15% per year. That's your foundation. Number two is where we change it up. This is the safety section. It needs to be less volatile than the S&P 500 so it gives the portfolio stability. The old three fund portfolio put bonds here. And we just saw what bonds have been doing. So here's how I actually measure safety. Not by what the fund's called, but by its beta. The S&P 500 has a beta of one. Beta basically measures how much something swings compared to the market. For the safety section, we want something well under one. And I'll be fair to BND here because its beta today is low around 0.25. So, it is calm, but calm while going nowhere for five years is not safety. That's just slow. The safety portion has to do two jobs. Swing less than the market and still actually grow your money. Bonds only pass the first test instead of bonds for people still in build mode. I want something that produces real cash flow, still has upside, and stays low volatility. something that holds up when the rest of the market drops, is light on technology, and heavy on durable businesses, but still does pretty well when the market's doing well. For that, I want a dividend fund. And the best one in my mind for this is SCHD, the Schwab US Dividend Equity ETF. Look at that beta. SCHD sits around 69. So, it swings about 30% less than the S&P 500. That's much more what I want to see here. Now look at the second test though because this is the more important thing. Over the past 5 years, BND returned about zero, actually negative there per year. SCHD over the same 5 years is up about 61% in total and about 13% a year over the past decade. SCHD also pays a dividend, currently a bit over 3%, and that dividend has grown every single year since the fund launched in 2011, 14 years in a row, which is crazy solid. And it costs almost nothing to own. The expense ratio is 06%. So even in a bad year and SCD's worst full year ever was down about 5%, you're still getting paid about 3% in dividends just to wait. Being down 5%, but collecting that dividend almost makes it a cheat code. It grows when things are good and you lose almost nothing when things are bad. And in 2022, the year stocks dropped 18% and bonds dropped 13%, SCHD was down only about -3%. That's the actual safety section doing its job. And this is the correct type of fund for this portfolio. And if you want to have something that's less in dividends but still high value and also very much low volatility, something like VTV, which is Vanguard's value fund, is a great opportunity there. Now, let's talk about the third part of the portfolio because this is the part that's supposed to carry a bit more risk. You understand that going into it, but you're hoping for the higher reward. If you're going to be putting in the risk, you better be hoping for a higher reward. Nowadays, it's no secret the biggest money maker in the stock market has been technology, specifically AI, but overall technology. For this section though, this is still a core portfolio. And so, I want this to be broadbased growth ETFs, not just one specific technology, but broadbased. And there's a bunch that actually fit in this. The broad growth ETFs I prefer are SHG as in growth, QQQM, and VUG. SPMO would also fit here and I love that fund. These hold a wide range of growth companies across different industries which makes them less risky than something that lives in only one sector. Those single sector types would be a pure technology fund like VGT or a semiconductor fund like SMH. Those can absolutely fit as a small satellite but not as the whole portion of this part. So now old versus new. Looking at VXUS, the 10-year average was about 9.7%. Looking at SCHG, the 10-year average was about 18.7%. Almost double. That's not a small gap. We put this in dollar amounts. If somebody puts $500 a month into VXUS and got that 9.7% for 30 years, they'd end up with about $1,60,000. But if they put the same $500 a month into SCHG and got $18.7% for 30 years, they'd be at about $8,360,000. That's quite the difference. Same $500, same 30 years. The only thing that changed was the ETF you choose. That's the beauty of my updated three fund portfolio I always talk about. Now, past returns don't guarantee anything future. And I'm not saying that by investing in SCHG you're going to get that actual return. I'm telling you that the growth portion of your portfolio deserves an actual growth ETF, not one that was built for 1985. So, the best three fund portfolio on the planet in my opinion is one foundational ETF like VU or VTI, one safe and stable ETF that pays you cash flow like SCHD or possibly VTV, and one higher reward slightly higher risk growth ETF like CHG, QQQM, VUG, and again, I also like SPMO in here, too. Now, moving on to the age categories. For every age group that I'm about to cover, I'd be very comfortable investing in this three ETF portfolio. I totally understand that it's nerve-wracking trying to figure this out alone. So, the percentages specifically is what you're going to tailor based off of your risk profile and what makes sense for you personally. Like I've done before, I'm going to start with the oldest group and work down to the youngest. The most important thing here, especially if you're younger, is to see how everything shifts as you get older. Yes, we pick funds that we're trying to set and forget, but you do want to shift the balance of them so that it helps your risk levels as you age and as you get closer to retirement where things matter a lot more. Also though, just know that this is a general guide and know that I'm trying to make a video to help out hundreds of thousands of you. for specific one-on-one financial coaching. Check out the link down in my description and pinned in that first comment for private financial coaching so you and I can jump on a one-on-one Zoom and discuss your unique specifics. But for now, let's start with retirement age. Now, notice that I said retirement age there because technically if you're like 37 years old and you have enough invested that you can live off of that comfortably, then you're retired. So, it's not a specific age, it's a life stage. In this stage, you're living solely off your investments, maybe plus social security, but you're not working for an income. That means that you need to be invested very differently than somebody who does have a consistent paycheck coming in every month. But here's the misconception that I hear a lot for people who are about to retire or at least close to retirement. They think once they hit retirement that they're done investing. They think you just pull all the money out and live off of the pile and eventually it starts dwindling down. That's incorrect. Say you have $1 million saved and invested and you only need $40,000 a year to live off of. You don't pull out that full million. You take out $40,000 and let the other $960,000 keep working in the market and hopefully keep growing. You do need to be smart and not have the bulk of it in a risky spot when you're relying on it. But investing doesn't just end. So the most important and first concern for anybody at this stage is safety. You can't control what the stock market does or how long it's down, but you can control how prepared you are for that. A typical downturn lasts 1 to two years. During that stretch, you don't want to be selling stock at a loss to pay your bills. So you draw from a different place while the market gets back to normal. That's why I'd like to see a minimum of three years worth of living expenses in something like a high yield savings account, money market, CD, just something outside of the stock market. Remember, if you're past traditional retirement age, you're likely starting to get a social security check or maybe even a pension. So, when I say living expenses, calculate the net. If you need about $5,000 a month for insurance, groceries, and bills, and Social Security sends you $1,500 a month, what you actually need covered is $3,500 a month. Per year, that's $42,000. So for you, I'd hope to see about $126,000 in that high yield savings account. It just sits there, earns interest, and hopefully never gets touched. Since downturns have rarely lasted more than 3 years, that gives you time to weather the storm, let the investments come back to life, and stay safe. And this is what lets you stay aggressive. Your money still grows when the market's good, and you don't have to sell when the market's bad. In this stage of life, I'd set the portfolio up as 50% in the value/dividend ETF, 40% in the foundational ETF, and 10% in the growth ETF with 3 years of cash in the high yield savings account. And here's the withdraw strategy. If there's ever a crazy downturn, that last two years, and you actually do have to start burning through that cash, that emergency fund that you have off to the side for that, then when the market comes roaring back instead of taking out that normal $42,000 each year, you're going to take out a bit more and replenish the emergency fund for that possible downturn in a decade or so. The S&P 500 gained about 18% in 2025 and about 25% the year before that. Say you have $900,000 invested and the portfolio makes just 15% in a recovery year. That's $135,000 of growth. Take out the $42,000 you need. Take out another 42,000 to refill savings and you're still up more than $50,000 on the year. Now, quick note. I know that I just mercilessly just smashed those bonds into the floor from before, but there is still one place that I'd allow them. For the person in this life stage who just wants to be extra conservative and doesn't just want to use the three years worth of cash, but actually wants another slice of the portfolio as another mode of defense just in case we have a very elongated down period, which we have had in the past to be fair, but it's just very, very rare. This is a spot specifically right here where bonds do make sense in a portfolio. If you know that's what's going to let you sleep at night, then absolutely do that for your portfolio. For that more conservative version, it'd be like 45% dividend ETF, 30% foundational ETF, 5% growth ETF, and then 20% in bonds plus that 3 years worth of cash in a high yield savings. The next group is 5 years away from retirement. Now, in my last video or my old video from last year, I've jumped straight to 10 years away from retirement. But since I have so many clients and most of them actually are closer to retirement, like 5 years or so, and I've been seeing between somebody who's 10 years away and 5 years away, there's a huge difference. So, I wanted to throw that into this video. And the main difference is the cash account. This is the window where you get very, very serious about building it. You're still a ways away from retirement. So, we don't take the foot off the pedal in the stock market, but we do want that cash reserve to be built. At this stage, I hope you have at least one year of living expenses saved. You're not on social security yet, so that one year is actually one year of your actual expenses. Whatever it costs you and your family to live comfortably for a month times 12 in a high yield savings account off to the side. Your goal though right now is to figure out what will your expenses be? What's an actual estimated expenses in retirement? because you're close enough to start being able to estimate that, including social security and anything else coming in and start building toward that 3-year number so you're actually ready to retire when the date hits in the portfolio. I'd go 40% in the dividend ETF, 40% in the foundational ETF, and 20% in the growth ETF. Now, if you're 10 years away from retirement, you're likely 50 to 60 years old. 10 years is moderately close to retirement, but it's definitely not too close. So, I don't want you getting too conservative on me. There's still a whole decade left and statistically during that decade you're gonna have more of a bull market than anything else and I don't want you to miss out on this last bull cycle before you retire. For this group my portfolio would be 40% dividend ETF, 30% foundational ETF, 30% growth ETF with one year of living expenses in the high yield savings account. But this 10-year mark is where the real retirement planning starts. And with that, tax planning because you don't want everything just in a 401k. And it may be time to start adding heavier to a taxable brokerage to and planning for Roth conversions as well. Now, what I've walked through so far is a simplified general framework that works for most people, but each person's different. Your goals are different, and your specifics are what matters. And so the more of those that you can understand, the more variables that you can actually figure out, the better you'll be able to actually put the correct percentages for your portfolio. So let's talk about if you're 20 years away from retirement. You're likely 40 to 45 years old and you're in the prime of your earning years. You've got a lot of time, so you can weather any storm, but you want to be smart here, catch all the ups and not drop too far on the downs. And there's a tax wrinkle at this stage that most people are missing. you're probably making a pretty good income right now. So, in your taxable brokerage, you don't want to have too many dividends or anything that's going to unnecessarily tax you right now. Dividend funds are wonderful inside a Roth or a 401k in a taxable account at a high income. I'd keep that slice a bit lower unless your whole strategy is building toward a full dividend portfolio. And this is kind of where I'm at right now with a higher income. And I did have a bunch of a dividend ETF, SCHD, in my taxable brokerage. I just stopped adding too much to SCHD within the taxable brokerage. Still do so in the Roth. But in the taxable portion, I've been adding VTV like I talked about from earlier in this video. It's still a value ETF with a very low beta, so it keeps that portion safe, but it has about half the dividend as CHD. And so I'm not getting taxed as heavily for that. But for the reasons I said here, bring the value/dividend ETF down to 30% and split the foundational and growth ETFs at 35% each and keep at least 6 months of living expenses in a high yield savings account as an emergency fund. Now, for those of you anywhere from like 25 to 45, you've got a bunch of breathing room ahead of you and you probably can't even fathom retirement. But don't go yoloing into the latest meme coin or into something that just went up a whole bunch and you're trying to strike it rich within 5 days. That's traditionally how you lose a lot of money. Most of the time, 99% of those people just lose everything. And if you lose everything, you're starting over from zero. You still want to be smart. The bulk of your portfolio should still be in the three ETF portfolio, no matter what your age is. Now, at my university, I do talk to students who are 20 to 24 years old. And they say, "Well, what about for me since I'm so far away from retirement? Can I just put a bunch more into individual stocks or crypto or these types of things?" And to them, I say, "You can risk a portion, but be careful with how much." You could add a portion in a riskier bets with higher upside, but if you lose it, at least you only lost like 10% of your portfolio instead of 50 or 100%. I'd still encourage 80 to 90% in the three ETF portfolio here. So 30% dividend ETF, 30% foundational, 30% growth, and 10% allocated however you see fit after doing your own research. That could be individual companies like Nvidia or Apple. It could be crypto like Bitcoin or Ethereum. Just be disciplined enough to keep this slice small. I'd like to keep it at 10%, but for those of you that need to scratch that itch, go as high as 20%, but please keep it at about that. Now, for those of you that are just starting investing, or maybe you just took over for a fund manager, or maybe you just moved over a 401k to an IRA and now you have to manage it yourself. This is so important and like I said before, this whole video is very general and simplified information and you could follow it for sure, but especially if you're starting out new here, this is a great time to get in touch with me and do a financial coaching session one-on-one so I can make sure you're on the right path and so that moving forward, you know, and you'll have the confidence to just do exactly what you're supposed to do to get to financial freedom. The link is in the pinned comment up at the top and in my description. So, go ahead and click that for more information on how to sign up. And so, for those of you that are just starting out, whether you're 18 years old or 80 years old, I would still highly recommend that the bulk of your portfolio, if not your entire portfolio, be in the three ETF portfolio that I've talked about here. Do that for one year and just watch how the market moves. Watch how simple it makes your investing. For me personally, it worked best to keep it incredibly simple. I just went 33% in each. A simple balanced portfolio. And that did exceptionally well for me. And after you've gotten a couple of years under your belt, you can switch it up based on your life stage and your goals and what your strategy is that maybe you and I came up together. Now, if you're anywhere near retirement, watch this video next because it's literally the only video you'll ever need to watch specifically on how to successfully retire and exactly what to watch out for because there are some crazy things that hurt people in retirement. Or watch this one that I did earlier this week. And remember to keep investing simplified.