Because it was a golden age for hedge fund managers, not their clients!
Where Are the Customers' Yachts?[1]
or A Good Hard Look at Wall Street
[1] http://www.wiley.com/WileyCDA/WileyTitle/productCd-047177089...
[2] http://www.fool.com/investing/general/2014/02/21/where-are-t...
35% in VOO, 35% in VWO, 30% in BND.
Depending on your risk tolerance you can lower/raise the proportion of BND.
- VOO: tracks the S&P500 index (US large companies)
- VWO: emerging markets equities
- BND: US bonds
I picked these index funds because Vanguard ETFs are well-regarded for their quality and extraordinarily low expense ratios. For example, the much more well-known SPY ETF, which also tracks the S&P500, has an expense ratio of 0.10%. VOO has an expense ratio of 0.05%.
"I have $100k what do I do with it?" is like asking "I have a car what do I do with it?"
If you live in Birmingham, AL and the car is a Tesla and your only method of transportation, the answer will be very different than if you live in San Diego and the car is one of five and it's a half million dollar supercar.
How old are you? How much do you have saved for retirement? How much do you want to earn during retirement? How much do you have in reserve in case you lose your job? In case you have major unexpected medical expenses? Has the money been taxed already or is it in a tax-advantaged account? Do you want it in a tax-advantaged account? What happens to you financially if you lose 10/20/50/100% of it? What happens to you mentally if you lose that percentage?
"Put it in these three funds" is the nest egg equivalent of saying "You drive it, duh" when someone asks what to do with their car.
Of course, 50% bonds was easy to recommend 40 years ago when US savings bonds paid 5-7% annual interest, guaranteed for 30 years.
Inflation in 1980 was over 13%. 2015 was less than four fifths of one percent. Bonds today pay out much better than they did 40 years ago.
Is this just for now or in general?
How about simply 70% VT (Total World), and 30% BND
That said, I think there is healthy skepticism with the world funds in terms of their ability to reduce risk considering so much correlation to us stock and dollar value, relatively high fees, and relatively weak long term performance relative to US markets.
Some of this is due to China not making available some of their investment opportunities to foreigners. I'd love to get an index fund that has exposure to growing companies like DJI or Didi.
Given that Apple is the largest holding in most S&P 500 and total stock market index funds, anyone who has invested in those funds will benefit somewhat from the success of Didi.
Jack Bogle, the founder of Vanguard, goes so far as to argue that a broad US-market index fund is all you need for international exposure, because many US companies will benefit from the success of the international companies they have invested in and do business with.
I don't quite buy that argument, but it's something to keep in mind when you construct a portfolio: index funds that appear to be distinct often overlap.
I do not receive a direct benefit from making this recommendation. (Not counting the feeling of doing good, or engaging in debate here or whatever).
EDIT: @ Silasx I don't disagree! Although, its cheaper for me to use Vanguard than to start my own index fund company. Not the hill I want to die on.