The Investment Portfolio You Can Set and Forget

The legendary John “Jack” Clifton Bogle liked to keep things simple. Here he explains how he invested a scholarship fund, capital he couldn't afford to risk:

I manage it on the assumption that nobody will touch it for a long time. I put half of it in Wellington Fund and half in a balanced index fund. Together, they would be 90% of the fund and then, against contingencies, just in case, I put five percent in the emerging market index.

I hope you're sitting down, because I put five percent in gold, just a five percent hedge against some kind of catastrophe.

Now, I wouldn't call that the perfect portfolio, but it's designed to be held through all extremes. With the two balanced funds, that’s going to give you roughly 62% in equities.

— Jack Bogle

The balanced funds Bogle mentioned here are likely the Wellington Fund (actively managed with about 65% in stocks and 35% in bonds) and the low-cost index-based balanced fund, the Vanguard Balanced Index Fund.

This split gave his portfolio a steady, diversified foundation, with enough in equities for long-term growth, but not so much that it would be reckless in downturns.

The fact that he included gold and an emerging markets index fund in his allocations will be a shock for any Bogle fans. He often criticized both.

About gold, he would say, it has "no internal rate of return. It doesn’t pay dividends. It doesn’t grow. It just sits there.”

What I find most fascinating in this quote isn't Bogle's specific choice of assets but his mindset. He built a strong and simple portfolio and then left it alone for at least a decade. Bogle didn’t spend time watching markets or guessing what would happen next, and he didn’t think you should either.

For more about Bogle’s life, career, and net worth, see the earlier My Daily Oracle newsletter, The Less You Rebalance, The More You Have.

Bogle wrote 12 books, but the best place to start for his investing advice is The John C. Bogle Reader. If you'd rather read about how he built Vanguard, then read Stay the Course: The Story of Vanguard and the Index Revolution. It's a surprisingly gripping story.

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