Who is Scott Burns?
Scott Burns is a newspaper columnist and author. He has covered personal finance and investments for over 30 years. He is known for creating the "Couch Potato Portfolio" investment strategy. This investment strategy advocates the use of index funds over managed funds or stock-picking.Rules of Couch Potato Portfolio
The rules of Scott Burns’ Couch Potato Portfolio is simple. It invests its 33% allocation to inflation-protected securities, 34% allocation to US stock market, and 33% to international stock market. It mainly invest in US, international stock, and bond market (TIPS).How to Invest
You can invest in this Couch Potato Portfolio through mutual funds or Exchange Traded Funds (ETFs). Below are the list.You can buy these investment funds through your brokerage.
Mutual Funds
- Vanguard Inflation-Protected Securities Fund (VIPSX)
- Vanguard Total Stock Market Index Fund (VTSMX)
- Vanguard Total International Stock Index Fund (VGTSX)
ETFs
- Schwab U.S. TIPS ETF (SCHP)
- Vanguard Total Stock Market Index Fund (VTI)
- Vanguard Total International Stock Index Fund (VXUS)
Performance overview
The 3 fund portfolio is considered as moderate allocation investment portfolio. It is often used as a simple benchmark for a balanced asset allocation. Traditionally, this portfolio mix has been shown to offer solid returns with a nice risk profile over the long-term.This Coach Potato Fund portfolio has returned 3.18 percent over the three years, and 7.35 percent over the past five years. The past 5 years performance is as follows:
| Year | Coach Potato |
|---|---|
| 2007 | 10.77% |
| 2008 | -28.07% |
| 2009 | 25.51% |
| 2010 | 11.63% |
| 2011 | -0.11% |
| 2012 | 13.97% |
| 2013 | 13.25% |
| 2014 | 3.96% |
| 2015 | -1.86% |
| 2016 | 7.44% |
Pros and Cons of Coach Potato/ Three-Fund portfolio
Pros:- The fund has lower risk than 100% stock funds.
- The investment portfolio has generate consistent returns for the past decade.
- It may be slightly aggressive than your conservative portfolio.
- Its returns is not great due to low return of international stocks.
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