How many Vanguard funds does it take to build a complete portfolio? No, this is not a lead in to a riddle or a joke, but rather the beginning of a story about the best kind of portfolio construction — simple, low cost and diversified.
In fact, the story of Vanguard itself is about the power of simplicity and frugality for the purpose of achieving market returns with very little effort.
As any proud Boglehead would boast, Jack Bogle is credited for pioneering the best kind of low-cost, diversified investment portfolios wrapped inside a wonderful package called index funds. Vanguard 500 Index Fund Investor Class (MUTF:VFINX) was the first index fund offered to individual investors.
Today, with a large selection index funds, actively managed funds and exchange-traded funds, investors can easily find the right combination of funds to meet their investment needs. But even with dozens of top funds to choose from at Vanguard, investors can build a diversified portfolio with just a few funds.
So in that spirit, we give you the only three Vanguard funds you need to build a complete portfolio: