Build Your First Index Portfolio in 60 Minutes
Three funds, one account, one auto-buy. Done.
You have a $1k+ buffer, no high-APR debt, and money sitting in checking.
A diversified, automated, tax-aware portfolio with under 0.10% in total fees.
You do not need to pick stocks. You do not need to predict the market. A three-fund index portfolio beats most professionals over 20 years because it costs almost nothing and you don't trade it.
- 01
Open the right account, in the right order
Fill these buckets top to bottom — each one is more tax-efficient than the next:
- ▸1. 401(k) up to the employer match (free money, ~100% return)
- ▸2. Roth IRA up to the annual limit (tax-free growth)
- ▸3. 401(k) up to the annual limit (tax-deferred)
- ▸4. Taxable brokerage for anything beyond
- 02
Pick three funds
Total US stock market, total international stock market, total US bond market. Pick the lowest-fee version your broker offers (Vanguard, Fidelity, Schwab all have <0.05% versions).
PitfallBuying actively managed funds. They charge 1%+ and statistically lose to the index. - 03
Set the allocation by age
A defensible starting point is 'age in bonds' (e.g. 30 yrs old → 70% stocks / 30% bonds). Younger and aggressive: 90/10. Closer to retirement: 60/40.
→ Run the allocation tool - 04
Automate the buys
Set a recurring transfer + automatic investment on payday. This is dollar-cost averaging — it removes timing and emotion from the equation.
→ DCA vs lump sum - 05
Set rebalance rules and walk away
Rebalance once a year, or when any allocation drifts more than 5 percentage points. Do not check daily. Do not sell on red days.
PitfallWatching the portfolio every day. The S&P 500 has positive years ~73% of the time and positive days only ~54%.