When building a retirement portfolio, the goal is to grow your assets for the long term. Since no one knows which asset classes will lead and which will lag, diversification is paramount. And Vanguard ETFs are an easy way to get some diversification.

If you’re further than 10 years from retirement, it’s wise to lean towards a more aggressive portfolio to capture the higher equity returns. As retirement approaches, dial back equities and increase fixed and cash equivalent holdings.

If you’re healthy and retire in your 60’s you might have an additional 20-plus years in retirement, so don’t forgo the stock market. In fact, you may want to ramp up equity investing as your retirement advances. This reverse glidepath strategy was suggested by Michael Kitces and Wade Pfau in an article on the Nerd’s Eye View entitled, “Should Equity Exposure Decrease In Retirement, Or Is A Rising Equity Glidepath Actually Better?”

These three Vanguard exchange-traded funds will work when building a retirement portfolio as well as during the drawdown years. Each of the Vanguard funds can be purchased through any investment account, while other financial firms offer comparable funds. The key to this simple retirement portfolio is to  invest in low-fee index ETFs that fit within these categories.

The rationale for a three-fund retirement portfolio is as follows. First, a simple investment portfolio in retirement leaves time for what matters most. Second, it provides diversification to minimize losses in a particular sector while maintaining broad exposure to the main asset classes and global markets. And finally, it cuts investment fees to the bone.

• Vanguard Total Stock Market ETF (NYSEARCA:VTI)
• Vanguard FTSE All-World ex-US ETF (NYSEARCA:VEU)
• Vanguard Total Bond Market ETF (NASDAQ:BND)

And now, let’s get further into why I like these three funds in particular.

Best Vanguard ETFs: Vanguard Total Stock Market ETF (VTI)

Expense Ratio: 0.03%, or $3 per $10,000 invested annually.

This U.S. stock market fund tracks the performance of the CRSP US Total Market Index. The benchmark includes companies spanning the mega-, large-, small- and micro-capitalization field and represents nearly 100% of the U.S. investable equity market.

The fund utilizes a passively managed, index-sampling strategy. VTI offers rock-bottom expenses and minimal tracking error versus the benchmark index. This total stock market fund owns roughly 3,500 stocks, with 22.6% of the assets in the 10 largest names.

The fund uses a market cap weighting, which means that returns will be influenced by the momentum growth of the biggest firms.

Investors seeking a more value-leaning equal weight US stock index fund might consider the Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP).

The funds sector weightings approximate the benchmark index, with approximately 25% in the technology sector, 17% in financials, 15% in healthcare and 14% in consumer services.

The largest holdings read like a who’s-who in American commerce and include Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN).

The returns of the fund parallel those of the index with a 10-year average annual return of 12.8%, and one-, three- and five-year returns of 11.5%, 9.6%, and 9.2% respectively.

Investing in the U.S. equity market has been a sound investment strategy for decades, and the 0.03% expense ratio is among the most affordable ways of capturing this growth. The current 1.8% 30-day SEC yield is higher than investors receive on most short-term cash equivalents.

Vanguard FTSE All-World ex-US ETF (VEU)

Expense Ratio: 0.08%

This large-cap-leaning international fund invests in developing and emerging market global companies. The passively managed fund attempts to match the returns of the FTSE All World ex-U.S. index. Investors willing to take a bit more risk for potentially higher returns among Vanguard ETFs might consider the Vanguard Total Stock International Index ETF (NASDAQ:VXUS) instead, which includes greater small-cap international exposure.

Like VTI, the VEU’s holdings are weighted by market cap, so the larger companies are a greater proportion of the fund. The allocation is geographically diversified, with 41% invested in Europe, 23% in in Emerging Markets, 29% in the Pacific and the remaining firms from North America and the Middle East.

The top holdings are well-known global names. Although, the top 10 holdings make up only 11.5% of the total fund assets. The largest holdings include Alibaba (NYSE:BABA), Nestle (OTCMKTS:NSRGY) and Tencent Holdings (OTCMKTS:TCEHY). Other major companies are representatives of the auto, pharmaceutical, electronic and oil industries.

The fund’s 0.08% expense ratio keeps most investment dollars in the markets, not flowing to the fund manager. Recently, international markets have underperformed the U.S., but seem to be turning around this year.

Vanguard Total Bond Market ETF (BND)

Expense Ratio: 0.035%

A total bond market fund rounds out this three-piece retirement portfolio of Vanguard ETFs. Bonds are still valuable to own as eventually; interest rates will rise along with bond yields.

Another Vanguard low-fee offer, BND is an intermediate bond fund with the objective to track a broad, market-weight bond index. Included in the fund are taxable investment-grade U.S. bonds. With 9,568 bonds and an average duration of 6.4 years, the current SEC yield is 1.4%.

The fund is heavily weighted to U.S. Government bonds, with 61% in this asset class. The next-highest weighting of 19% is in Baa rated bonds. And 12.6% of the fund is invested in A bonds with a small percent allocated to Aaa and Aa rated bonds. The 0.035% expense ratio is negligible.

In summation, create your asset allocation to fit your comfort with investment volatility. Allot greater percentages to the stock market if you’re younger and more comfortable with risk. If not, bulk up your bond investment.

Retirees should consider their short and intermediate cash flow needs and invest accordingly. Meanwhile, it’s prudent to keep at least one year’s living expenses in a high yield cash account.

Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she held positions in VTI and VEU.