Okay thanks guys, maybe I will try one of those "all in one" funds then. I'm wondering, if I do that does that mean that once I get enough money on my account ($12000) then I can just switch over to the four MMM funds for free?
Why those four funds? That book was written in the late 1990's and while the principles haven't changed much since then, better funds have been developed for investors.US Stocks
: Rather than a large-cap index fund and a small cap index fund, you can buy a Total US Stock Market Index fund and own the whole US stock market at market capitalization weight. There is a case to be made for over-weighting small cap stocks relative to their market cap weight, but I'd consider just buying a Total Stock Market Index fund instead of those two separate funds unless you want to do an overweight.International
: VDMIX tracks the MSCI EAFE index, which is an index containing 936 large-cap stocks of 22 developed countries outside North America. This means you'll own no Canadiana, Russian, Brazilian, Indian or Chinese or other emerging stocks stocks. You'll own no small cap international stocks. Or, you could go with Vanguard Total International Stock Market Index Fund which, like its US counterpart, buys stocks (6,214) in the entire investable world market (43 countries), at their market capitalization weight. If you want to own the whole international market, then go with Total International and not the MSCI EAFE fund.Bonds
: Why short-term bonds? Why not a total bond market fund with more diversity in sector and maturity? The short-term bond fund has all bond maturities within 5 years and mostly government, but a Total Bond Market Index Fund also invests in longer-term bonds and a broader range of bond sectors.
Of the three asset classes above, I would say going with the 2-fund US allocation in Bernstein's book is OK; not a big deal. Going with short-term bonds over a total bond market is probably not a big deal. But there is no way I'd invest my international allocation in a large-cap developed market fund when I could invest in a far more diversified international fund like Vanguard Total International Stock Market Index Fund. So, if you really want those four funds, if I could persuade you to swap just one, it would be the international one.
[When Bernstein wrote that book, there was no total international stock market index fund, so he had to recommend a basket of specific funds like MSCI EAFE, Emerging Market, Small Cap, etc. But now you can hold them all, at their market weight, in one fund.]
Coincidentally, the three funds I mentioned are the three core funds in the LifeStrategy and Target Retirement funds, which that same author recommended to investors in the link in my earlier reply.
I recommend you read Bernstein's other book, The Four Pillars of Investing. This is the best investing book I've read and if you can absorb its lessons, you'll know all you need to know to be a successful investor.