Featured Posts

The Tree of Happiness There is no nexus between a tree and your happiness. At least, that's what I believed until I learned about the tree of happiness -- Albizia. Chinese call it a tree of happiness. It bends in the winds but doesn't break. Interesting. I call it perseverance. How... Read more

The Simple Path to Wealth One of the cornerstones of this blog is the fact that you need to achieve financial peace so that financial worries can't rob your happiness. Everything we do is for one and only one reason -- to be free and to be happy. A street smart person knows how to... Read more

Why Trump Will Be the Next President After winning primary in the Hoosier State, Donald Trump has been declared the presumptive nominee of the Republican party. Pundits declared that he can't win against the Clinton political Juggernaut. May be. But I don't agree. While most polls show Clinton... Read more

The White Coat Investor: A Book Review I admire physicians. I am not a physician but I have been fortunate to work with several smart physicians. Physicians are naturally bright professionals as I have seen them learning technology and even programming even though that is not their core focus. On... Read more

Why Apple is still a good investment   You don't have to be a pro to understand why Apple is still a good investment; in fact, you are better off being a motley fool even if you watch CNBC. On Jan 28, 2015 Jim Cramer called it an investment of lifetime; a stock that will rise again this... Read more

Diversify...Really?   It's OK to have your eggs in one basket as long as you control what happens to that basket. -- Elon Musk It sounds oxymoronic but the fad in the personal finance industry is to promote diversification. Ironically, most of us are really bad at diversification... Read more

Wela: An Interview with Wes Moss With the advent of the Internet, our lives have changed forever. Amazon is redefining how we buy anything including pencils to power tools. Whether you like it or not, wealth management has also begun its inroads on the Internet. The brilliant idea that you... Read more

How to Invest in Stocks like a Pro   Let's face it -- most of us, mere mortals, consider investing ourselves in a stock market akin to playing Roulette in Las Vegas! If you have similar thoughts then you are not alone! According to Henry Blodget, one time super star Internet stock expert,... Read more

Why I still Invest in Apple   Let's face it -- most of us are Apple investors. If you deny, look at top ten holdings of any mutual fund that you own. Unlike old superstar stocks of the past -- Intel, Microsoft or Dell to name a few -- there is something unique about Apple. It has... Read more

lnvestment Lessons from Warren Buffett Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays. -- Warren Buffett While Warren Buffett... Read more

Is Tesla Still a Worthy Investment?   "Is Tesla still a worthy investment?," asked a friend of mine who read my article which I wrote back in June of last year. A lot has happened since then. Tesla stock has doubled in price and Elon's presence in the media is omnipresent. This guy is... Read more

Year 2013: My Favorite Personal Finance Articles It is hard to believe but, indeed, year 2013 is in the box. For stock investors, it was a banner year. Nasdaq finally climbed back to its old highs and other indices performed brilliantly as well. While pundits on the Street may have tried their best to... Read more

Get Free Articles!

Proud Member of Yakezie

Gone Fishin’ Portfolio: A Simple Way to Build Wealth

A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money. — Warren Buffett.

Have you bought into the notion that only professional money managers know how to build wealth for you? Are you stoic enough to see your hard-earned money not growing even at a modest 6%? Have you banished the dream of comfortable retirement? You are not alone!

The hallmark of street smart approach to life — and even to investing — is to defy pervasive myths so that you can take control of your own destiny. In fact, you can beat professional money managers without spending more than 20 minutes of your time per year. All you need is to understand time-tested Gone Fishin’ Portfolio developed by Alexander Green.

Gone Fishin’ portfolio proves the wisdom of Oracle of Omaha very well by investing entirely into low-cost, well diversified Vanguard Index funds. After a friend of mine advised me to read this amazingly simple yet profound book of investing, I felt compelled to share this simple yet powerful wealth building portfolio.

If you have never heard of Vanguard funds, I recommend that you first dive deep into Jim Collins’s blog to know why he vehemently believes in Vanguard family of funds to build wealth for the long haul.

The cornerstone philosophy of the Gone Fishin’ Portfolio is to invest in well diversified Vanguard index funds in your tax deferred accounts to build wealth. This portfolio has a spectacular 15+% return since its launch in 2003.

Asset Allocation

Alexander Green believes that asset allocation alone plays a vital role in your portfolio’s long-term performance. He has developed his asset allocation model based on Harry Markowitz’s research paper “Portfolio selection,” published in the Journal of Finance.  In 1990, Harry Markowitz won Nobel prize in economics for his groundbreaking research.

In a nutshell, theory espoused by Harry Markowitz underlines the fact that it is impossible to remove uncertainty from the markets, but you can mitigate long-term risk inherent in the market by devising a portfolio of uncorrelated assets like stocks, bonds and precious metals.

 Importance of Rebalancing

Once you design a portfolio of uncorrelated assets, your investment is on auto-pilot. Depending on the superior performance of certain asset class, you will end up having your portfolio with different percentage weighing by each asset at the end of the year. It’s time to rebalance your portfolio. It’s wise to rebalance only after a year to avoid short-term capital gain(currently at 15%, and possibly 30% next year unless Washington can make any progress on the fiscal cliff).

Akin to smooth ride you get after balancing all four wheels of your car, your balanced portfolio allows you to invest more in the under-performing assets and, at the same time, reduces overall risk in the long haul.

Remember the Taxman

Average mutual fund takes 2.5% in annual cost each year. Taxes take another 2%, on average. — John Bogle

If you follow Gone fishin’ portfolio strategy and invest entirely in Vanguard funds, you will end up saving 2% each year in annual cost alone. But, don’t rest on your laurels yet. The taxman is about to become your silent partner, if you don’t think about ways to avoid paying taxes on your growing portfolio. The best way to find tax shelter is to invest all your money into tax-deferred account. By doing so you boost your portfolio performance by 4.5%.

Avoiding taxes on your portfolio is not an abdication of your civic duty; rather, it is to secure your retirement as evident from the stark performance difference between tax-managed and non-tax-managed portfolio.

Parting Thought:

Gone fishin’ portfolio is one of the simplest strategies you can use to grow your long-term portfolio at a double digit rate without dealing with anxiety to invest in individual stock. This New York Best seller proves that you don’t need to hire a pro to become wealthy; rather, you need to thank John Bogle.

Most individual investors would be better off in an index mutual fund. — Peter Lynch


The Market Always Goes Up @ Jlcollinsnh

Can’t Save? Write it Out, Bitches @ Free Financial Advisor

Easy Tips for a Richer Life @ Modest Money

Related Posts Plugin for WordPress, Blogger...

Comments (20)

Sounds intriguing Shilpan. Simple and low cost certainly appeal to me! And do I understand correctly that this portfolio has returned over 15% per year, on average, since 2003?

John Bogle’s one of my investing heroes, and Vanguard surely transformed the mutual fund business. I’ll have to put Gone Fishin’ on my reading list.


That’s right, Kurt!


In the seven years since its inception, it has done just that, returning 15.5% a year while experiencing less volatility than the S&P 500.

I do not agree with the idea of investing in broad based index funds. Like the standard and poor five hundred. Theirs many narrow sector funds available that are indexes to themself. Why not buy into these sectors when they have declined by a hugh amount. A good example is solar exchange traded funds these funds have declined close to 95% from their highs of five years ago. Theirs also many single country funds that are available today that were not available just a few years ago. When theirs some kind of financial crisis in another country that could create a great chance to buy that countries stock market at a great price.

Thank you, Sir!

I’m honored you chose to link to my site.

While the Fishin’ portfolio would certainly work and its use of Vanguard Index Funds is laudable, it is needlessly complex. :)

I think you have uncanny ability to simplify, so I would like to know your thoughts about making Gone Fishin’ portfolio simplification.

Thanks Shilpan…

Kind of you to ask. Where Fishin’ uses 10 funds, I use 3, all Vanguard as well:


Basically what Fishin’ has created is an allocation to address three goals:

60% Growth, Using Two USA Stock Funds (30%) and three (!) International funds (30%).
20% Deflation protection: Two Bond Funds
20% Inflation protection: The Gold and REIT funds and the inflation adjusted bond fund.

My Smoother Path Portfolio does the same but less expensively and more simply:

50% Growth with VTSAX, Total Stock Market Index Fund.
25% Inflation Protection with Real Estate in VGSLX (Vanguard Total REIT Index Fund)
25% Deflation Protection with VBTLX (Vanguard Total Bond Market Index Fund) + whatever cash I happen to be holding at the time.

These three also have the advantage of being even less expensive than the Fishin’ funds.

Note, I don’t feel the need for International Funds for reasons explained here: http://jlcollinsnh.wordpress.com/2012/09/26/stocks-part-xi-international-funds-2/

I am also not a fan of gold, but I’ve yet to write that post. :) For now let’s just say REITS perform that role with the advantage of throwing off income along the way.

Hope that helps!

Thank you, my friend. I am sure that readers will benefit handsomely from your wisdom.

Sounds pretty solid Shilpan! I’ll have to compare this list to the one I put together myself this past month. I do love the goal of security and steady returns.

You are very good with numbers, so I appreciate if you can share your analysis here, MMD!

Quick reminder; When interest rates rise, the value of the bond funds will drop. But all in all, 15% since 2003 is quite impressive.

Agreed. Value of bond fund has inverse relationship with the rate of interest. Thanks for the reminder, Barb!

[…] on Stocks — Part XV: Target…Shilpan on Stocks — Part XV: Target…Gone Fishin’ P… on Stocks — Part II: The Ma…Gone Fishin’ P… on […]

I enjoyed reading your take on the fishin’ approach. I love Vanguard funds, but only have four instead of ten. Easy is often better for amateurs such as myself. Have a great Holiday season.

[…] @ Street Smart Finance takes on a review of the Gone Fishin’ Portfolio. A simple way to build a portfolio through low-cost index investing, preferably with Vanguard. In […]

[…] there's ample proof that this concern is not true and never has been. Read more on MarketWatch Facebook's first report: Numbers, or chatter? Markets Stream gives you a single place to follow…social networks. Here … Read more on MarketWatch U.S. economy moving sideways again WASHINGTON […]

[…] you are looking for a more simplified way to invest, check out the Gone Fishin’ Portfolio at Street Smart […]

[…] Gone Fishin’ Portfolio: A Simple Way to Build Wealth on Street Smart Finance […]

[…] Gone Fishin’ Portfolio: A Simple Way to Build Wealth […]

If your objective is to perform in line with the market than an index fund is fine.

[…] putting all of your eggs in one basket is a surefire way to bring misery. That’s why I like Gone fishin’ portfolio as it makes investing as simple as you can […]