My personal approach to investing for FIRE can be summarized as being 95% boring.
I don’t think everyone needs to be as boring as me, but I think there is plenty of room for more of you to at least be a little more boring when it comes to your investments.
The goal is for the 95% boring portion of my portfolio to fully represent my “FIRE Portfolio”. The same portfolio that reaches my Enough Number, supports a 3% withdrawal rate, and never requires me to earn another dollar again.
My 95% portfolio shouldn’t get me excited. If talking about the underlying investments makes my heart start beating faster, it probably isn’t boring enough. If it is something worth talking about at parties, it probably isn’t boring enough. Not that this stops me from talking about mega backdoor Roths at parties. This could be why I stopped getting invited to parties.
What Does Boring Look Like?
I view boring as aligned with the Boglehead philosophy of investing. Focusing on broad total market index funds with very low fees. Trying to match the overall market, not beat the market.
Like many of you, I won the income game having worked in FAANG and being in a dual-tech, dual-income household. I don’t need to worry about trying to win the investment game.
The simplest Boglehead approach is the three-fund portfolio.
VTI for US Equities
VXUS for International Equities
BND for Bonds
VTI, VXUS, and BND are simply Vanguard ETF examples commonly used by Bogleheads. There are plenty of other low-fee index funds that fit my definition of boring, many of which I own myself.
There isn’t a specific asset allocation that makes a portfolio boring. Having a clear asset allocation that aligns with your goals and consistently sticking with it is what makes it boring.
My asset allocation target remains where it was when I changed it in 2024:
58% US Equities
27% International Equities
15% Bonds
I was actually just spot checking my asset allocation today, and it looks like I am right on target.
For most of my working career I was closer to 10% or less in bonds. I slightly increased that to 15% as I approached FIRE.
So we have boring, low-fee index funds.
We have a clear target asset allocation aligned with my goals.
Boring also means making smart decisions when it comes to minimizing lifetime taxation. This is where Asset Location comes in, which in the simplest terms means holding assets in their most tax efficient location. For example, you wouldn’t want to hold most of your bonds in taxable because they spit out distributions taxed at ordinary income rates… which isn’t ideal while working in FAANG and living in California.
This has led me to hold most of my bonds in my Pre-Tax 401ks. My Meta 401k is actually 100% bonds. This is why it is important not to worry about the asset allocation of any individual account, but instead zoom out and look at all your accounts together. My Meta 401k can be 100% bonds while my overall bond allocation remains at my 15% target.
I have more detailed articles on these topics below:
Consistently Putting Excess Cash to Work
Being boring, consistently over a long period of time, coupled with one or two high-paying jobs… is FIRE on easy mode. Being boring is about ensuring the highest probability of reaching my enough, not just reaching a new high score.
Anytime I have excess cash, I simply go through my cash flow waterfall to see which account is next. I spot check my asset allocation to see which asset is underweight. I don’t need to think hard about it. I am able to just execute.
Recap: Boring is low-fee, broad total market diversification, an asset allocation that matches your goals, a tax-smart asset location, and consistent execution over time.
What Isn’t Boring
No Airbnbs, no private equity, no individual stocks, no complicated insurance products, no trading options, no art, and no crypto.
You can still very much have those things. But I would bucket them into your non-boring allocation and be explicit about what percent you allow.
A concentrated position in a single company isn’t boring either!
I intentionally do not include individual stock holdings as part of my 95% boring FIRE portfolio (beyond those in my direct index).
Particularly when you have large concentrated positions in tech stock or crypto, your 5% non-boring allocation can easily balloon to 15% after a few good news articles or earnings releases.
What about the 5% non-boring?
The entire point is that the 5% is small enough that if you nail things with the 95% you can’t hurt yourself too much regardless of what you do with the 5%.
I also make my life harder by not counting that 5% towards my Enough Number. My 95% boring portfolio is my FIRE Portfolio. That is the portfolio I expect to support my spending and never require me to earn another dollar again.
This creates an incentive for me to become even more boring over time. If I have $100k sitting in a concentrated stock position, I don’t give myself credit for that $100k towards reaching my Enough Number. It only “counts” after I sell it and diversify.
The 5% is a cap. I don’t need to go out and seek something interesting to do with 5% of my portfolio. If I end up 97% or 100% boring, even better.
Should I be 100% boring? Yes. But having that 5% as an explicit allowance gives me enough space to scratch any itch that I may have.
My investing is boring, so the rest of my life doesn’t need to be.
Being boring is so underrated
Thanks, Andre! A mostly unrelated question, and you’ve probably covered this somewhere else before, but do you include taxes in your target Enough Number/3% withdrawal rate?