Here Are The 20 Best Income Portfolios Built with ETFs for 2023
If you're looking for income then you should look at this list of the 20 best income portfolios.
What is the Permanent Portfolio?
The Permanent Portfolio is built with 4 ETFs. It is exposed to 25% stocks, 25% bonds, 25% gold, and 25% cash. The Permanent portfolio is the investment portfolio created by Harry Browne to do well in any market climate.
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What is the historical return of the Permanent Portfolio?
Below you can see the historical return of the Permanent Portfolio.
Portfolio data was last updated on 11th of August 2023, 08:35 ET
| Name | Year to date | Return in 2022 | 10 year return | CAGR since 1989 (%) | Draw Down | Expense ratio | Yield |
|---|---|---|---|---|---|---|---|
| The Permanent Portfolio | 3.7 | -12.5 | 3.97 | 6.52 | -12.5 | 0.14% | 1.5 |
Here is what the table is showing you
Year to date: This shows what the portfolio has returned this year starting from the first trading day of the year.
10 Year return: This shows the compounded annualized growth rate over a ten-year period. The current year is excluded from calculations.
CAGR since 1989: This shows the compounded annualized growth rate since 1989. The current year is excluded from calculations.
Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs.
Yield: This is the expected dividend yield of the portfolio.
Please note that past performance is not a guarantee of future returns.
How does the Permanent portfolio compare to the best portfolios?
Below you can see the returns of the best portfolios that we have benchmarked.
| Name | See Portfolio | Year to date | Return in 2022 | 10 year return | CAGR since 1989 (%) | Draw Down |
|---|---|---|---|---|---|---|
| Ben Stein Retirement | Coming soon! | 4.05 | -18.03 | 9.46 | 10.8 | -35.42 |
| Paul Merriman 4-Fund-Portfolio | Coming soon! | 9.22 | -11.98 | 11.25 | 10.38 | -35.26 |
| S&P 500 | Coming soon! | 17.09 | -18.19 | 12.52 | 10.28 | -37.63 |
| Paul Merriman Target Date Portfolio (25 year old) | Coming soon! | 6.63 | -13.08 | 8.28 | 10.2 | -36.46 |
| Scott Adams Dilbert Portfolio | Coming soon! | 10.87 | -18.75 | 7.0 | 10.19 | -44.88 |
| JL Collins, Simple Path To Wealth, Wealth Building Portfolio | Coming soon! | 16.6 | -19.51 | 12.08 | 10.19 | -37.0 |
| American Institute of Individual Investors (AAII) Portfolio | Coming soon! | 3.74 | -13.91 | 9.7 | 10.16 | -40.85 |
| Paul Merriman Target Date Portfolio (35 year old) | Coming soon! | 6.57 | -13.22 | 8.31 | 10.08 | -36.35 |
| Assetbuilder.com Portfolio 14 | Coming soon! | 6.95 | -16.94 | 7.59 | 9.99 | -37.91 |
| Balanced Portfolio 90/10 | Coming soon! | 14.83 | -18.87 | 11.03 | 9.84 | -32.78 |
How do you build Permanent Portfolio with ETFs?
Here is how you build the Permanent Portfolio with ETFs:
25.00% US Total Stock Market (VTI)
25.00% Long-Term Treasuries (TLT)
25.00% Cash (money market fund) (BIL)
25.00% Gold (IAU)
What is the Permanent Portfolio?
The Permanent Portfolio is an investment strategy developed by Harry Browne in the 1980s. It is a passive, long-term investment strategy designed to provide a high level of safety and stability, regardless of market conditions.
The Permanent Portfolio is based on a simple asset allocation model, with equal weighting across four asset classes:
Stocks: The portfolio invests 25% in stocks, typically in a broad-based index fund that tracks the U.S. stock market.
Bonds: The portfolio invests 25% in long-term U.S. Treasuries or other high-quality bonds to provide stability and income.
Gold: The portfolio invests 25% in physical gold or gold bullion, which is considered a safe haven asset that can provide a hedge against inflation and economic uncertainty.
Cash: The portfolio invests 25% in cash or cash equivalents, such as short-term Treasury bills, to provide liquidity and flexibility.
The idea behind the Permanent Portfolio is that each of these asset classes has unique characteristics that make them well-suited for a particular economic environment. For example, stocks tend to perform well in periods of economic growth, while gold and bonds may perform better during periods of economic uncertainty.
By diversifying across these asset classes, the Permanent Portfolio seeks to provide a stable, long-term return with minimal risk. While the portfolio may not generate the highest returns during strong bull markets, it is designed to provide consistent returns over the long term, regardless of market conditions.
Harry Browne designed his portfolio to do well in almost any market situation.
It is easy to understand and implement.
The Permanent Portfolio has 4 asset classes each one betting on a particular market climate.
Harry Browne’s Permanent portfolio is described in his book Fail-Safe Investing.
Harry Browne - Fail-Safe Investing: Lifelong Financial Security in 30 Minutes
Craig Rowland also covers the Permanent portfolio in The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy.
The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy
What are the 4 asset classes of the Permanent Portfolio?
The permanent portfolio is created by using 4 asset classes.
Each asset class protects against a certain economic climate.
The 4 asset classes of the Permanent portfolio are:
Stocks – Stocks do well during periods of general prosperity and/or declining inflation.
Gold– Gold does well in periods of high inflation. During inflationary episodes, gold bullion provides protection against a falling currency and other potential problems.
Long-Term Bonds – Lone-term bonds do well during periods of declining interest rates. Bonds also do well during prosperity.
Cash – Cash does well in a recession. In a recession, no asset class is going to do well. The cash in a Treasury Money Market Fund offers stability when portfolio asset classes fall in price. It also protects purchasing power during a deflation.
Asset allocation for Harry Browne’s Permanent Portfolio
Piechart showing Harry Browne's Permanent Portfolio
What are the advantages and disadvantages of the Permanent portfolio?
Here are the advantages of the Permanent portfolio
The portfolio is very easy to understand and implement.
It has great downside protection – it has had a low drawdown of -13.48%.
You get to hold 25% of your portfolio in gold.
The portfolio bets on every possible market scenario. This completely negates FOMO.
The Permanent Portfolio is sleep safe portfolio.
It is a low-risk portfolio.
Here are the disadvantages of the Permanent Portfolio
The portfolios may be too conservative with its 25% in cash (or short-term bonds).
It makes a bet on gold that may not be desirable.
Investors may want a more fine-grained portfolio with more asset classes.
It is a low-risk portfolio. You might want to take more risk if you’re young.
What is an alternative to the Permanent Portfolio?
The All-Weather portfolio is a very similar portfolio. The All-Weather portfolio is a portfolio designed by Ray Dalio.
The All-Weather portfolio consists of the following asset allocation:
- 30.00% US Total Stock Market (VTI)
- 40.00% Long-Term Treasuries (TLT)
- 15.00% Intermediate-Term Treasuries (VGIT)
- 7.50% Commodities (DBC / GSG)
- 7.50% Gold (IAU)
You can read about the All-Weather portfolio in our article Build The All-Weather Portfolio, Tony Robbins And Ray
Where can I learn more about the Permanent portfolio?
Go here for a rebalance worksheet.
There are two good books on the Permanent Portfolio. One is Harry Browne’s own book Fail-Safe Investing
And the other one is The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy
Suggestions for your next steps
If you have already committed to a portfolio then maybe you need help maintaining the portfolio. In this case you will find our rebalance worksheet useful.
Rebalancing your portfolio lowers your risk and may provide higher returns in the long run. It is completely FREE.
You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool.
Related questions
Is the Permanent Portfolio a good investment?
The Permanent Portfolio is a good investment if you do not like high drawdowns in your portfolio and you still want a good return on your money.
What is a good average return on a portfolio?
A good average return for a portfolio is 7% or higher. The stock market has risen about 10% in the last 80 years.
What is the best investment for monthly income?
The best investment for monthly income is a dividend stock portfolio. You can invest in 18-25 stocks of the dividend aristocrats and have a good income at retirement.
