Sound Investing Two Radical Investments – U.S. 4-Fund Portfolio vs. S&P 500
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Sep 17, 2025 The host dives deep into a comparison between the U.S. 4-Fund Portfolio and the S&P 500, showcasing five decades of data. Discover how diversification impacts returns and volatility. Fascinating decade-by-decade analysis reveals that the 4-Fund strategy outperformed the S&P 500, particularly in the fourth decade. The discussion also links accumulation results to retirement planning, highlighting potential starting balances. Lists of downloadable tables support the analysis, making it a must-follow for investors!
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Four-Fund Strategy Outperformed S&P Over 55 Years
- A U.S. 4-fund all-equity portfolio compounded at 12.2% from 1970–2024 versus 10.9% for the S&P 500.
- A 60/40 using the four-fund equity compounded 10.3%, showing diversification raised long-term returns here.
Small Advantages Compound Into Big Gains
- The four-fund equity showed higher returns than the S&P 500 historically, but future results aren’t guaranteed.
- Small historical advantages in return can accumulate into large differences over decades.
Dollar-Cost Average And Increase Contributions
- Start regular monthly investing and boost contributions by a small percentage each year to benefit from accumulation.
- Paul used $1,000 initial annual ($83.33/month) then increased contributions 3% yearly as a realistic example.