Long time lurker here, first time poster. While I started following Harry Browne's work more than 20 years, I have never held a strictly PP portfolio, but have nevertheless been strongly influenced by it. I try to diversify not just across asset classes, but also across strategies, to hopefully get a better risk adjusted return and higher perpetual withdrawal rate (PWR). I retired 3 years ago at the age of 40, so having a high theoretical PWR, but only utilizing some of it, is my goal to safeguard my (hopefully) long retirement period.
My overall portfolio is broken up into a few different buckets:
1. Core allocation in taxable account (about 45% of total assets)
- 20% VTI
- 20% VBR
- 20% GLDM
- 20% VGLT
- 20% VNQ
This is a GB inspired allocation, but with with real estate subbed info for cash. According to PortfolioCharts, this allocation has a higher PWR than all the other portfolios, and higher baseline short-term and long-term return averages. Obviously, without the cash, it will have higher volatility, but the higher return is enough to boost the PWR despite the increased volatility.
2. Tactical allocation in taxable account (about 20% of total assets).
This bucket follows Stoken’s Active Combined Asset Strategy (https://allocatesmartly.com/stokens-act ... -strategy/
), which trades the same asset classes as above (except VBR), but buys and sells based on price channels. I like this tactical strategy because it reduces drawdowns (which are PWR killers) and volatility, while achieving a higher average return compared to buy-and-hold of the same assets. It is less tax efficient than buy-and-hold, but most taxable events are either LT cap gains, or ST losses.
Buckets 1 and 2 together have a backtested worst-case PWR of 6.3% and a real CAGR of 7.5%, but I'm targeting an actual withdraw rate closer to 4% for the next 10 years to reduce sequence of return risk.
3. IRA accounts (about 20% of total assets).
This bucket uses a combination of various strategies from https://allocatesmartly.com
that have a low correlation to the core allocation and to each other, which hopefully reduces overall portfolio volatility. Since this happens in an IRA, there is no tax-drag from frequent (bi-monthly) allocation changes.
4. Private Real Estate investing (about 6% of total)
I'm unsure if this bucket is a useful diversifier or an unnecessary risky play.
5. Cash (current about 4% of total)
I keep about 1 year's worth of expenses (rather than a fixed % of the portfolio), mostly in VUSXX.
6. Other: HSA, 529, etc.
These small accounts are typically restricted in assets and trading, so they are mostly just balanced equity/bond funds.
If I ever get sick of the tactical stuff, or determine that it really doesn't add any value, then I have a fallback plan to just simplify as much as possible down to the Core portfolio allocation.