3 lazy wallets ideal for future millionaires

Golf is difficult. Investing shouldn’t be.

A simple portfolio of a few low-cost index funds is likely to outperform the more complicated and expensive investment products on Wall Street. Called lazy portfolios, these investment strategies work if you have $ 100 or $ 100 million to invest. They also work if you’re 50 years away from retirement or already enjoying your golden years.

There are dozens of lazy wallets. In this article we will look at three of the most popular. For each portfolio, I will include the compound annual growth rate (CAGR) using Portfolio viewer. The performance data covers January 2010 through May 2021, an important limitation to which we will return in a minute. I’ll also include how long it would take to become a millionaire at that rate, assuming one has maxed out an IRA ($ 6,000 in 2021).

Portfolio of 3 funds

By far the most popular, the Portfolio of 3 funds It is all that a future millionaire needs. As the name suggests, it consists of just three asset classes:

  • US stocks
  • US bonds
  • International Actions

The amount an investor allocates to each asset class will depend on their tolerance for risk and their investment time horizon. For long-term investors, an allocation of 55% US stocks, 35% international stocks, and 10% US bonds is a reasonable approach, but it is certainly not the only one.

Investors can implement the portfolio of 3 funds with index mutual funds or ETFs from a variety of fund providers. Here are some examples:


  • Vanguard Total Stock Market Index Fund (VTSAX)
  • Vanguard Total International Stock Index Fund (VTIAX)
  • Vanguard Total Bond Market Fund (VBTLX)


  • Fidelity Total Market Index Fund (FSKAX)
  • Fidelity Total International Index Fund (FTIHX)
  • Fidelity US Bond Index Fund (FXNAX)

CAGR: 10.68%

Time to be a millionaire (TTM): 28 years

Paul Merriman wallet

My friend Paul Merriman has built what he calls the Final purchase and retention portfolio. In the case of stocks, it consists of 10 asset classes. Yes, that’s a lot, although implementing it with a broker like M1 Finance makes managing the portfolio a breeze. Here are the 10 asset classes:

  • S&P 500
  • US Large Cap Value (LCV)
  • US Small Cap Mix (SCB)
  • US Small Cap Value (SCV)
  • Real Estate Investment Trust (REIT)
  • International Large Cap Mix (LCB)
  • International LCV
  • SCB international
  • International MCS
  • Emerging markets

Note that the equity portfolio is heavily weighted with international stocks, small-cap stocks, and value stocks. Historically, small cap and value have performed extremely well. Over the past decade, however, large-cap growth stocks have been the leaders.

As such, during the time period measured for this article, the portfolio has lagged a bit. For longer periods of time, say the last 5 decades, the strategy has worked extremely well. I calculated the return without any exposure to the bonds, although the bonds should be aggregated as dictated by the investor’s risk tolerance and time to retirement.

CAGR: 10.08%

TTM: 29 years

Warren Buffett portfolio

Finally, the Warren Buffett portfolio embodies the Steve Jobs philosophy that simplicity is the ultimate sophistication. It consists of just two asset classes: an S&P 500 index fund and a short-term US government bond fund.

This portfolio comes from Mr. Buffett 2013 Letter to Berkshire Shareholders. After noting that paid money managers are not worth it, he outlined the instructions he has given to trustees on how to manage the money he will leave his wife:

My advice to the trustee couldn’t be simpler: put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard). I believe that the long-term results of the trust from this policy will be superior to those obtained by most investors, be they pension funds, institutions or individuals, who employ managers with high fees.

This simple wallet has outperformed the others over the past decade.

CAGR: 13.25%

TTM: 24 years

Here is a snapshot of the performance of each portfolio:

Keep in mind that in the last decade high growth companies outperformed other parts of the market. That will surely change. When it does Paul Merriman portfolio it could easily outperform Warren Buffett’s portfolio over a period of time. At other times, the portfolio of 3 funds will outperform.

Also, there are other lazy wallets worth considering, such as the David Swensen Portfolio or the Portfolio Ray Dalio. The key is that any of the lazy portfolios above should be a critical part of a long-term buy and hold investment strategy.

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