You do not need a complex portfolio of dozens of mutual funds or individual stocks to retire early. The Bogleheads-style Three-Fund Portfolio is one of the most popular setups for passive investors, offering extreme diversification, low fees, and effortless maintenance.
The portfolio uses three asset classes: a Total Domestic Stock Market Index Fund, a Total International Stock Market Index Fund, and a Total Bond Market Index Fund. Adjusting the allocation percentages allows you to tailor the risk and return characteristics to your specific retirement timeline.
This simplicity prevents emotional trading errors and reduces management costs. As you approach early retirement, shift the ratio slightly toward bonds to secure your short-term cash needs without having to dismantle your compound interest engine.