The three funds
Domestic Total-Market Equity
Broad exposure to your home country's stock market
Examples:
- • US: VTI, SWTSX
- • Canada: VTI, TDB900
International Total-Market Equity
Developed and emerging markets outside home country
Examples:
- • VTIAX, FTIHX
- • VEA + VWO (separate)
Investment-Grade Bonds
Stability and diversification from fixed income
Examples:
- • US: BND, VBTLX
- • Canada: VAB, TDB909
Sample allocations
Aggressive (Young investors, long timeline)
Domestic Equity
International
Bonds
High growth potential, higher volatility. Good for 20+ year timeline.
Balanced (Moderate timeline, middle-aged)
Domestic Equity
International
Bonds
Balanced growth and stability. Good for 10-20 year timeline.
Conservative (Near/in retirement, low risk)
Domestic Equity
International
Bonds
Lower volatility, steady income. Good for 5-10 year timeline.
How to maintain
Maintenance Strategy
- Automate purchases – Set up recurring buys to target percentages
- Rebalance annually – Or when any fund drifts ±5% from target
- Use new money first – Direct new contributions to underweight funds
- Tax-smart rebalancing – Use tax-advantaged accounts for sells
- Review annually – Adjust allocation as you age or goals change
Sample three-fund implementations
| Platform | Domestic | International | Bonds | Total ER |
|---|---|---|---|---|
| Vanguard ETFs | VTI (0.03%) | VXUS (0.08%) | BND (0.03%) | ~0.05% |
| Fidelity | FZROX (0.00%) | FTIHX (0.06%) | FXNAX (0.03%) | ~0.03% |
| Canada (TD) | TDB902 (0.33%) | TDB911 (0.51%) | TDB909 (0.33%) | ~0.39% |
Frequently Asked Questions
Why include bonds?
Bonds dampen volatility and help you stay invested during stock market crashes. They also provide diversification and steady income.
Can I use a one-ticket ETF instead?
Yes—funds like VTHRX, VEQT, or target-date funds offer built-in rebalancing. Less control but more convenience.
How do I choose my allocation?
Consider your age, risk tolerance, and timeline. A common rule: bond % = your age (40 years old = 40% bonds).
Should I include REITs as a fourth fund?
Optional. REITs are already included in total market funds. A separate REIT fund adds complexity for modest diversification benefit.