I spent a little time today looking at alternative portfolios. I wondered if a portfolio much heavier in stocks could beat the GB over long time periods while making 4% withdrawals. Portfolio 1 below is GB. Portfolio 2 is 80% stock/20% total bond. Portfolio 3 is the same stock but with 10% total bond and 10% gold (for the gold bugs).
Data from
https://www.portfoliovisualizer.com/backtest-asset-class-allocation Portfolio 1 – Golden Butterfly
Large Cap Blend 20.00%
Small Cap Value 20.00%
Long Term Treasuries 20.00%
Short Term Treasuries 20.00%
Gold 20.00%
Portfolio 2 – Global 80/20
Large Cap Value 10.00%
Large Cap Blend 10.00%
Mid Cap Blend 10.00%
Small Cap Value 10.00%
REIT 10.00%
Intl Stock Market 10.00%
Intl Small Cap Stocks 10.00%
Emerging Markets 10.00%
Total Bond 20.00%
Portfolio 3 – Global 80/10 Total Bond/10 Gold
$1M, withdraw an initial $40K adjusted for inflation, annual rebalancing.
Real CAGR GB vs Global 80/20 vs 80/10/10
1972-2015 3.35% vs 5.46% vs 6.22%
1986-2015 2.65% vs 6.11% vs 5.80%
1996-2015 1.82% vs 2.97% vs 2.92%
2001-2015 1.61% vs 1.81% vs 2.49%
2006-2015 1.51% vs 0.36% vs 0.91%
The global 80/20 beats the GB in all cases except the last 10 years. Surprisingly, the 80/20 was better even when starting in 1972, though it didn’t begin to power ahead until 1984.