Consumer Reports All-Index Portfolio

Do you put a lot of stock in Consumer Reports? Many people do, and for good reason - they tend to offer reasonable, well-researched advice. I happened to run across a May 2006 edition of a Consumer Reports newsletter about investing. They had a cover article on an all-index portfolio. It was a reasonable, though slightly conservative, portfolio. I thought I'd post the ideas here.

They posted several investment alternatives for each step; I'll just post the Vanguard option. Note that ETFs are available for each option as well.

Step 1: Select A or B for 60% to 70% of your portfolio.
A. A broad market fund for 70% of your portfolio (Vanguard Total Stock Market Index)
B. Pick one S&P 500 fund for 50% or 60% of your portfolio (Vanguard S&P 500 Index) AND
Add 1 to 3 of these for 10% to 20% of your portfolio:
1. A midcap blend index (Vanguard midcap Iidex fund) - S&P Midcap 400)
2. A smallcap blend index (Vanguard smallcap index fund - Russell 2000)
3. A smallcap growth index (Vanguard smallcap growth index fund - Russell 2000 growth)
4. A smallcap value index (Vanguard smallcap value index fund - Russell 2000 value)
5. A foreign largecap blend (Vanguard Developed Markets fund or Vanguard Total International fund)

Step 2: Add 1 of these for 30% of your portfolio: A bond market index (Vanguard Total Bond Market or AGG ETF) or Vanguard Intermediate Term bond fund.

It's a little conservative for younger investors, but that probably wasn't the target of the article. Note that this portfolio doesn't allocate a lot to the international portion. If you like, you could simply take some percentage off the bond portion and add it to the "Step 1 - B" part of the portfolio.