(This is the first in my series of Model Portfolio Comparisons.)
The Couch Potato Portfolio is the invention of Scott Burns, a personal finance columnist at the Dallas Morning News. Originally, the portfolio consisted of just two funds – the Vanguard S&P 500 Index Fund (VFINX) and the Vanguard Total Bond Index Fund (VTBMX). That was over 15 years ago, and it has beaten most balanced funds in the meantime. The current version is below.
Asset Allocation (All Ages)
50% Total US Stock Market
50% US Inflation-Indexed Securities.
There are many ways that people find fault with this portfolio – low stock allocation, no risk adjustment with time, no international exposure, no REIT fund. Partially in response to these, Burns has also introduced other variations like the Margarita Portfolio and Four Square Portfolio. The Margarita Portfolio is 33% Total US Stock Market, 33% Total International Stock Market, and 34% Inflation Protected Securities. But still, you can’t beat the simplicity.