Buy the Big Three

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Jonathan Clements was a longtime personal finance columnist for The Wall Street Journal, and he offers great advice at the best price you can get (free) on his blog Humble Dollar. Here is one piece of advice from his site:

BUY THE BIG THREE. The global market portfolio consists of four major sectors, roughly equal in size: U.S. stocks, U.S. bonds, foreign shares and foreign bonds. Arguably, foreign bonds are optional, offering modest yields but wild currency swings. The other three sectors, however, are crucial to a diversified portfolio. Do you have enough exposure to all three?”

It’s a good thing that Mr. Clements considers foreign bonds optional, because they are not available in the Thrift Savings Plan (TSP). The rest of the asset classes are, though. U.S. stocks can be purchased in the C and S funds. U.S. bonds in the G and F funds. The I fund will get your foreign stocks, albeit not in any emerging markets.

In other words, you can get “the big three” very easily in the TSP. If you missed it, you can read about the TSP and all its funds here in my TSP guide.

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