Chapter 12: Five portfolios, built start to finish
Eleven chapters built a method one written line at a time. This chapter runs the whole method five times, start to finish, on five people whose situations span four decades and a hundredfold difference in balances. The walk is the same every time: goals get dates, dates get buckets, the worst-year column sets the mix, the mix becomes funds, the funds become a dollar table that sums to the penny, and the result fits on one page. The worst-year figures throughout come from Vanguard's published model-allocation data (1926–2024): 100% bonds −13.1%, 20/80 −14.4%, 40/60 −18.4%, 60/40 −26.6%, 80/20 −34.9%, 100% stocks −43.1%, with the 70/30 and 90/10 readouts from Chapter 9's rehearsal at −30.7% and −39.0%. The fund names below are generic on purpose; any total US market index fund near 0.03%, total international fund near 0.05%, and total bond fund near 0.03% fills the role.
Quinn: start right, then leave it alone
Quinn is 24, a nurse earning $68,000, with her emergency fund parked per the Cash & Bonds Guide. Her investments total $9,500: a 2065 target-date fund holding $9,000 in her 401(k), plus the $500 total-market fund she bought to learn with. Her one goal has the longest date in this chapter, retirement four decades out, and her stated wish is to start right and stop worrying.
Her TDF sits near 90/10 this far from its date, and the worst-year readout at that mix is −39.0% (1926–2024). On her balance that is a $3,705 hit, taking $9,500 down to $5,795 in a catastrophic year. Now set that against her contributions: $450 a month is $5,400 a year, which means one year of automatic saving outweighs her worst historical year. At her size and distance, the market is not her main variable. The savings rate is.
So her plan declines every complication this guide examined. The TDF's glide does Chapter 11's work, its internal rebalancing does Chapter 10's, and a fee near the 0.27% industry average (Morningstar, 2025) is a fair price for a machine she never has to touch. The three-fund rebuild can wait until her balance makes the fee gap worth the homework.
| Quinn's dollars | Where | Amount |
|---|---|---|
| 2065 target-date fund | 401(k) | $9,000 |
| Total US market index fund (0.03%) | brokerage | $500 |
| Total | $9,500 |
- For: retirement, about 2065. One goal, one date, one fund.
- Mix: the 2065 TDF's glide, near 90/10 today.
- Autopilot: $450 a month into the 401(k), raised one point with every raise.
- Rebalancing: the TDF does it internally; the $500 fund rides.
- Worst-year line: about $3,705 on today's balance, less than one year of contributions.
- I will not: open new accounts out of boredom, or check the balance more than quarterly.
Quinn's whole plan took eleven minutes to write, and she spent three of them suspicious that it was too short. Then she reread Chapter 2's table and did her own arithmetic on the back of a shift schedule: her worst year costs less than her autopilot deposits. "The plan is one paragraph," she wrote at the bottom, "because the work is the deposit, and the deposit is automatic."
Dev: the three-fund, formalized
Dev is 28, a software developer with $140,000 invested in a three-fund portfolio at 80/20 with 30% of stocks international, plus a house fund he refuses to gamble. The house money has a date inside five years, so it lives in T-bills on the safe shelf per the Cash & Bonds Guide and stays out of this table entirely; dated money does not ride the mix.
His 80/20 came from the worst-year column, not from being 28: the row reads −34.9% (1926–2024), which on $140,000 means a fall to $91,140, a $48,860 hole. He wrote that dollar figure in Chapter 9 and decided he could hold it, with a decade-plus horizon and a paycheck that keeps buying through the bottom. His international 30% sits inside Vanguard's published 20–40% guidance, settled in Chapter 4 after a year of dithering.
| Dev's dollars | Fund | Amount |
|---|---|---|
| US stocks, 56% | Total US market index fund (0.03%) | $78,400 |
| International stocks, 24% | Total international index fund (0.05%) | $33,600 |
| Bonds, 20% | Total bond market index fund (0.03%) | $28,000 |
| Total | $140,000 |
The blended cost of that table is about $49 a year. His rebalancing rule is the pair of bands he formalized in Chapter 10: 5 points on the stock-bond split, 5 points on the international share, new 401(k) money first, taxable sales last.
- For: retirement (no fixed date, decades out); the house fund lives separately in bills with its own date.
- Mix: 80/20, with 30% of stocks international.
- Funds: three, at 0.03/0.05/0.03; about $49 a year all-in on $140,000.
- Autopilot: max the 401(k), then the IRA, then taxable, in that order.
- Rebalancing: 5-point bands on both splits; new money first; annual January check.
- Worst-year line: $48,860. Written down, reread before any change.
- I will not: touch the house fund, add a fourth fund without retiring one, or act on a forecast, including mine.
Mara: three goals, three speeds
Mara is 36, a pharmacist with $310,000 freshly consolidated after the account cleanup in the Cash & Bonds Guide. She has three goals with three dates, which is why one risk score was never going to work for her: a sabbatical in 4 years, retirement around 30 years out, and a 529 she has been meaning to open. Chapter 1 sorted the dollars by date; the table below is that sorting, priced.
| Mara's goals | Date | Vehicle | Amount |
|---|---|---|---|
| Sabbatical (6 months at $6,000) | 4 years | T-bill ladder (Cash & Bonds Guide) | $36,000 |
| College fund | 15+ years | a line in the plan; the 529 opens when the child arrives | $0 |
| Retirement | about 30 years | 70/30 mix, below | $274,000 |
| Total | $310,000 |
The sabbatical money is dated, so it earns its keep in bills where a bad market year cannot cancel the trip. The retirement money runs at 70/30, the mix she chose in Chapter 9 after the rehearsal: the readout at 70/30 is −30.7% (1926–2024), an $84,118 hit on $274,000, and she decided she could hold that with the sabbatical ring-fenced and twenty-plus working years ahead. Her retirement sleeve, spelled out in funds:
| Mara's retirement sleeve | Fund | Amount |
|---|---|---|
| US stocks, 49% | Total US market index fund (0.03%) | $134,260 |
| International stocks, 21% | Total international index fund (0.05%) | $57,540 |
| Bonds, 30% | Total bond market index fund (0.03%) | $82,200 |
| Total | $274,000 |
- For: three goals, three dates: sabbatical (4 years), college (15+), retirement (30).
- Mix: bills for the dated money; 70/30 for retirement; the 529 opens when the child arrives.
- Autopilot: monthly into the retirement sleeve; the sabbatical ladder is already fully funded.
- Rebalancing: 5-point band on the retirement sleeve only; the ladder has its own clock.
- Worst-year line: $84,118 on the retirement sleeve, and zero on the trip, by construction.
- I will not: raid the sabbatical ladder for a dip, or let a hot market talk the trip money into stocks.
Hugo: the tent goes up, the pitches go down
Hugo is 52, a dentist with $1.4 million, and the most-pitched person in this guide: private credit for his 401(k), direct indexing at 0.40%, a "Yale model" SMA. He wants to slow down at 60, which gives him eight years and makes him a sequence-risk case study; his window from Chapter 11 has already opened.
His mix today is 75/25, and the glide is the point: two and a half points of stocks come off every year so the tent ridge lands at 55/45 at 60, with the drift back up scheduled for his late sixties per the Pfau-Kitces evidence. The worst-year math brackets his current mix between the table's neighbors: −26.6% at 60/40 and −34.9% at 80/20 (1926–2024), which on $1.4 million is a loss between $372,400 and $488,600. He has read those numbers out loud. The glide exists so the bracket shrinks every year the window stays open.
The direct-indexing decision took one napkin: 0.40% on $1.4 million is $5,600 a year against $420 at index pricing, and the strategy's genuine users are high earners with large gains to offset and fresh taxable cash flowing in, which an eight-years-out buy-and-hold dentist mostly is not. The private-credit 401(k) pitch fell to the six-factor script he built in Chapter 8. What survived is a 2% explore sleeve, named honestly in writing.
| Hugo's dollars | Fund | Amount |
|---|---|---|
| US stocks, 51.45% | Total US market index fund (0.03%) | $720,300 |
| International stocks, 22.05% | Total international index fund (0.05%) | $308,700 |
| Bonds, 24.5% | Total bond market index fund (0.03%) | $343,000 |
| Explore sleeve, 2% | his call, sized to be wrong | $28,000 |
| Total | $1,400,000 |
- For: slowing down at 60, never quite stopping, by his own preference.
- Mix: 75/25 today, minus 2.5 points of stocks a year, ridge at 55/45 at age 60, equities drifting back up after 67.
- Funds: the same three as Dev, plus the named 2% sleeve.
- Rebalancing: the annual glide step IS the rebalance; new contributions land on the bond side until the ridge.
- Worst-year line: $372,400 to $488,600 today, shrinking by design every year.
- I will not: buy any product whose fee I have not said out loud, or let the explore sleeve exceed 2% even when it is winning.
The direct-indexing pitch arrived with a harvesting projection and lunch. Hugo brought the napkin: $5,600 a year against $420, for a benefit aimed at someone with gains he does not have and cash flow he does not add. He declined, kindly. Then he did the thing that actually quieted the itch to tinker: he wrote "explore sleeve, $28,000, money allowed to be wrong" into his own plan, in his own handwriting, and discovered that a named 2% scratches better than an unnamed 40 basis points ever did.
Elaine: a floor, then a mix
Elaine is 63, a retired teacher with $700,000, and her need is the plainest in the book: $5,000 a month without fear. Chapter 11 did her arithmetic: the research range of 3.9–4.7% sustainably draws $27,300–32,900 a year from $700,000, Social Security carries the rest of her $60,000, and the claiming decision lives in the Personal Finance Guide.
Her build starts with the floor, sized at three years of full spending: $180,000 in the bill ladder she learned in the Cash & Bonds Guide, extended from twelve rungs to three years of them. Spending for years 1–3 arrives on printed dates regardless of headlines, which is what makes the rest of the portfolio ownable at all. Behind the floor, $520,000 runs at 45/55. The nearest row on the table, 40/60, shows a worst year of −18.4% (1926–2024); at her weights that is roughly a $95,680 dip on the invested half, and the floor means she would not need to sell a single share into it for three years. Her withdrawal rule carries the guardrails: start inside 3.9–4.7%, skip the inflation raise after any losing year, refill the ladder's far rung in good years.
| Elaine's dollars | Vehicle | Amount |
|---|---|---|
| Spending floor, years 1–3 | T-bill ladder | $180,000 |
| US stocks | Total US market index fund (0.03%) | $163,800 |
| International stocks | Total international index fund (0.05%) | $70,200 |
| Bonds | Total bond market index fund (0.03%) | $286,000 |
| Total | $700,000 |
- For: $5,000 a month, for life, without fear.
- Mix: a 3-year ladder floor, then 45/55 behind it.
- Withdrawals: start inside 3.9–4.7% with guardrails; Social Security covers the gap to $60,000.
- Rebalancing: refill the ladder from the portfolio in good years; never from stocks in a down year.
- Worst-year line: about $95,680 on the invested $520,000, with three years of groceries that cannot hear it.
- I will not: sell shares to fund a month the ladder already funds, or chase yield with the floor.
What do all five pages have in common?
Every plan here was built in the same order, and the order is the method: goals first, dates second, the worst-year dollar line third, and only then a mix, funds, and a table. Every dollar has a job and a date, and dated money never rides the mix, whether it is Dev's house fund, Mara's sabbatical, or Elaine's floor. Every mix was read off the same worst-year column (1926–2024) against a written dollar figure the owner agreed to in advance. The ingredients cost 0.03–0.05%, with Quinn's 0.27% TDF as the one priced exception, bought deliberately for autopilot rather than performance. Each plan contains a written trigger for rebalancing and a short list of things its owner will not do. And each one fits on a single page, which is the entire next chapter. The five pages disagree about everything local, the splits, the floors, the sleeves, because the five lives disagree; the method underneath does not move.
Build in order: goals, dates, worst-year line, mix, funds, dollars, page. Any product that cannot point to its own line on the page does not get bought.
Key takeaways
- One method built all five portfolios: dates sort the dollars, the worst-year column (Vanguard model-allocation data, 1926–2024) sets the mix, and the table must sum.
- Quinn's plan is a paragraph: keep the 2065 TDF near 0.27%, automate $450 a month, and let one year of deposits outweigh her −39.0% worst case.
- Dev and Mara show the middle game: three funds at 0.03/0.05/0.03, dated money in bills, written worst-year lines of $48,860 and $84,118, and 5-point bands.
- Hugo's bond tent takes him from 75/25 to 55/45 at 60 by 2.5 points a year, after declining a $5,600-a-year direct-indexing pitch and naming a 2% explore sleeve.
- Elaine stacks a $180,000 three-year ladder floor under a 45/55 mix and starts withdrawals inside the research range of 3.9–4.7%, with Social Security carrying the rest.
Sources: Vanguard model-allocation data · Bogleheads three-fund convention · Morningstar target-date fund research · Kitces on the bond tent · Morningstar State of Retirement Income · Vanguard rebalancing research (December 2024) · Finvest Cash & Bonds Guide · Finvest Personal Finance Guide · Finvest Tax Playbook