Best 3 ETF Portfolio Buy & Hold FOREVER (BEST Simple Investing)
Summary
Nolan presents an updated version of his popular three-fund portfolio, designed for 2026 and 2027, which he considers the most effective and simple investment strategy available. He asserts that the traditional three-fund approach, especially as reflected in many 401ks, is outdated due to significant market changes since its inception.
Nolan critically evaluates the traditional components:
Nolan's updated three-fund portfolio consists of the following components:
Nolan then provides specific portfolio allocations based on life stage:
Mentioned Stocks
Reasoning: Nolan suggests individual companies like Nvidia can be part of a small, discretionary 10-20% allocation for younger investors (20-24 years old) who want to engage in riskier bets with higher upside. He emphasizes keeping this slice small and disciplined to avoid significant losses, advocating for 80-90% of the portfolio to remain in the three core ETFs.
Reasoning: Nolan suggests individual companies like Apple can be part of a small, discretionary 10-20% allocation for younger investors (20-24 years old) who want to engage in riskier bets with higher upside. He emphasizes keeping this slice small and disciplined to avoid significant losses, advocating for 80-90% of the portfolio to remain in the three core ETFs. He also notes Apple as an example of a global company providing international exposure without a dedicated international fund.
Reasoning: Nolan lists SPY as a foundational broad US index ETF that tracks the S&P 500, alongside VU and VTI. He notes its extremely low expense ratio (0.03%) and highlights the S&P 500's strong performance, averaging about 15% per year over the last 10 years. It forms the core stable component of his updated three-fund portfolio.
Reasoning: Nolan suggests crypto like Bitcoin can be part of a small, discretionary 10-20% allocation for younger investors (20-24 years old) who want to engage in riskier bets with higher upside. He emphasizes keeping this slice small and disciplined to avoid significant losses, advocating for 80-90% of the portfolio to remain in the three core ETFs.
Reasoning: Nolan mentions VGT as an example of a "pure technology fund" which could fit as a "small satellite" to the core portfolio, but not as the entire growth portion due to its single-sector focus and higher risk. He distinguishes it from broad-based growth ETFs that are preferred for the core portfolio.
Reasoning: Nolan mentions SMH as an example of a "semiconductor fund" which could fit as a "small satellite" to the core portfolio, but not as the entire growth portion due to its single-sector focus and higher risk. He distinguishes it from broad-based growth ETFs that are preferred for the core portfolio.
Reasoning: Nolan identifies VTI as a foundational broad US index ETF that tracks the total US stock market. He notes its extremely low expense ratio (0.03%) and highlights the S&P 500's strong performance, averaging about 15% per year over the last 10 years. It forms the core stable component of his updated three-fund portfolio.
Reasoning: Nolan considers SCHD the "best" dividend fund for the safety section. It has a beta of ~0.69, meaning it swings about 30% less than the S&P 500. It returned 61% total over the past 5 years and about 13% annually over the past decade. It pays a dividend (currently over 3%) that has grown for 14 consecutive years. Its expense ratio is 0.06%. In 2022, when stocks dropped 18% and bonds dropped 13%, SCHD was only down about 3%, proving its role as a stable, cash-flow generating asset.
Reasoning: Nolan suggests crypto like Ethereum can be part of a small, discretionary 10-20% allocation for younger investors (20-24 years old) who want to engage in riskier bets with higher upside. He emphasizes keeping this slice small and disciplined to avoid significant losses, advocating for 80-90% of the portfolio to remain in the three core ETFs.
Reasoning: Nolan criticizes BND, stating it "dropped like a rock" in 2022 (-13%) when it was supposed to be a hedge. It's still 20% below its August 2020 all-time high of $89.59. Its 10-year average return is 1.4% per year, which is below the current inflation rate of 3.4%, meaning it's "losing money slowly." While acknowledging its low beta (around 0.25), Nolan dismisses its 'calm' nature as 'calm while going nowhere.' He only allows it for "extra conservative" retirees as a small defense slice.
Reasoning: Nolan lists QQQM as a suitable broad-based growth ETF for the higher reward section of the portfolio. He states these ETFs hold a wide range of growth companies across different industries, making them less risky than single-sector funds, while aiming for higher returns.
Reasoning: Nolan identifies SCHG as a preferred broad-based growth ETF for the higher reward, slightly higher risk section of the portfolio. He highlights its strong performance, averaging about 18.7% per year over the past 10 years, almost double the 9.7% of international ETFs like VXUS. He uses a dollar amount example ($500/month for 30 years) to show how SCHG's performance could lead to $8.36 million versus VXUS's $1.6 million, emphasizing the "beauty of my updated three fund portfolio."
Reasoning: Nolan lists SPMO as a suitable broad-based growth ETF for the higher reward section of the portfolio. He states these ETFs hold a wide range of growth companies across different industries, making them less risky than single-sector funds, while aiming for higher returns. Nolan explicitly says, "I love that fund" and "I also like SPMO in here, too."
Reasoning: Nolan states that VXUS, despite a strong 2025 (32% return), has lagged for a decade. Over the past 10 years, it averaged 9.7% per year, significantly underperforming the S&P 500's 15.4% per year. He argues that modern global companies (like Apple) within US indexes already provide international exposure, making a dedicated international fund redundant and less rewarding for the risk taken. He mentions that business practices have changed since the 70s/80s, making geographical diversification less relevant.
Reasoning: Nolan recommends VTV as an alternative for those wanting less dividends but still high value and low volatility. He personally "stopped adding too much to SCHD within the taxable brokerage" and "been adding VTV" instead because it's a value ETF with a very low beta and has about half the dividend as SCHD, resulting in less tax burden for high-income earners in taxable accounts.
Reasoning: Nolan identifies VU as a foundational broad US index ETF that tracks the S&P 500. He notes its extremely low expense ratio (0.03%) and highlights the S&P 500's strong performance, averaging about 15% per year over the last 10 years. It forms the core stable component of his updated three-fund portfolio.
Reasoning: Nolan lists SPYM as a foundational broad US index ETF that tracks the S&P 500, alongside VU and VTI. He notes its extremely low expense ratio (0.03%) and highlights the S&P 500's strong performance, averaging about 15% per year over the last 10 years. It forms the core stable component of his updated three-fund portfolio.
Reasoning: Nolan lists VUG as a suitable broad-based growth ETF for the higher reward section of the portfolio. He states these ETFs hold a wide range of growth companies across different industries, making them less risky than single-sector funds, while aiming for higher returns.