I'm feeling quite compelled here to recap the last two episodes JUST TO MAKE SURE I have it right..

The 4-Fund portfolio Episode 36 & 37 Redux:

Tax-Deferred Account (e.g. IRA):
1. A Bond fund - % = age OR, age divided by 2

Taxable Account (general investment account):
2. A Money Market Fund - at least 5%
3. An International Fund - 5-30%
4. A Total Market Fund - remaining % goes in here.

So, an example based on this episode, the "4-Fund +1" could look like this:

Tax-Deferred Account:
1. Taxable Money Market Fund - 5% e.g. Prime Money Market (VMMXX)
2. Total Bond Market Fund - 8%* e.g. Total Bond Market Index (VBMFX)
3. Treasury Bond Fund - 7%* e.g. Long-Term Bond Index Fund (VBLTX)

Taxable Account:
4. Tax Deferred Money Market Fund - 5% e.g. Tax-Exempt Money Market (VMSXX)
5. International Stocks - 10%** e.g. Total International Stock Index (VGTSX)
6. Emerging Markets - 10%** e.g. Emerging Markets Stock Index Fund (VEIEX)
7. Total Market Fund - 55% e.g. Total Stock Market Index (VTSMX)

* Total holdings in bonds equaling 15%, based on the (less-conservative) 'age/2 formula' (I'm thirty).
** Total holdings in international stocks at 20%, based on personal risk tolerance.

Some feedback here would be great..

Also, I do have a question though about U.S. based funds such as the Total Stock Index - Does it include a reasonable exposure to small-cap stocks?

Hi Thai!

I think that looks great. Quite a simple portfolio. I should note there are both Tax Deferred retirement accounts (Traditional IRA) and Tax Free Retirement Accounts (Roth IRA).

See the rest of my notes below:

(3) If you had to, you could loose the Treasury Bond Fund, in the tax-deferred account. Not really necessary since you'll have Treasury debt exposure through VMMXX. Maybe replace with TIPS fund, new episode covering them in detail coming out Wednesday.
(4) It's not tax deferred money market fund, just Tax-Free :)

An answer to your final question is difficult due to the word reasonable. All of the small cap stocks are included in a TSM fund, the thing is they account for a small percentage allocation of the portfolio because they have such small market caps. The S&P 500 accounts for about 80% of all stock market value in the United States, which means the other 4500 companies account for just 20%. So even though you will have direct exposure to Small Cap stocks in a TSM fund, the exposure will be small when compared to S&P 500 exposure.

I will be covering Small Cap funds soon, but don't let this change your direction; you are on the right path as is. Plus, if the mood strikes you can always add a Small Cap Value fund down the road.

** IMPORTANT UPDATE **

There will be no episode released on Tuesday, January 20th. I had a last minute seminar pop-up and didn't have time to prepare an episode for Tuesday. We will be back on Wednesday, January 21st.

Thanks for your understanding.

Ethan Bloch
Host, The Way to Build Wealth

Yes, i agree with Thai, i m also compelled to watch the last two episodes.

Well your show is much informative but can you change your topic "financial planning" in your next episode for the students who are in collage life and don't have money already saved up. How they can manage it? I hope you will think about it and start this topic very soon. Waiting for it.

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