💼 Cash Management in HB-PP: To Rebalance or Not? 🔄

[frugal]

Hello everyone,

At the moment, the cash portion within my HB-PP portfolio stands at only 10%, while the HB-PP allocation represents roughly 20% of my total assets.

I am wondering whether it would make sense to rebalance the cash component within the HB-PP itself, or if maintaining this relatively low cash level is acceptable, given that I can access additional liquidity outside the HB-PP portfolio when needed.

Specifically, I am trying to understand the trade-offs between keeping a higher cash buffer internally—potentially reducing portfolio returns—and relying on external liquidity sources.

I would greatly appreciate any insights, experiences, or best practices from those who have faced a similar scenario. How do you typically approach cash management within a concentrated allocation like HB-PP while maintaining overall portfolio flexibility?



Wishing everyone a successful and prosperous 2026!

[mathjak107]

if you are holding long term bonds then the cash represents the other half of the barbel, that brings down the volatility and duration of the long term bonds

[dualstow]

Of course it’s not just about liquidity, as you noted when you wrote

potentially reducing portfolio returns

I have a lot of stocks in vp, so it’s easy for me to hold lots of cash in the pp (way more than 10% of pp)
It does feel good to have cash when stocks come way down and stay down.

I would either get cash up to 15-25% or, if you’re pro stocks, just admit that you don’t have a pure pp, call it something else, and rely on your external reserves.

[mathjak107]

after a while it’s like trying to be a little bit pregnant .

if you aren’t following the portfolio as designed then you can do as you like .

that’s a call no one else can make for you .

most who are waiting for that proverbial fall in stocks gave up so much over the years they won’t ever get back to what they could have had .

in fact most would not commit large sums back in to a plunging market that either looks like it has no bottom or it’s a suckers rally.

so do what meets your goals.

if you are where you need to be financially then cut back .

otherwise. you still need the growth and can’t afford to miss it

[frugal]

Hey everyone!

Following up on my previous post, I’m curious about a PP-style portfolio with a 33-33-33% allocation (equities / bonds / gold ).

I’m trying to understand:

How would the overall risk change compared to a more traditional allocation?

What kind of impact on performance/returns could we expect?


Would love to hear your experiences or any examples you’ve seen!

Thanks in advance .

[Jack Jones]

Hey everyone!

Following up on my previous post, I’m curious about a PP-style portfolio with a 33-33-33% allocation (equities / bonds / gold ).

I’m trying to understand:

How would the overall risk change compared to a more traditional allocation?

What kind of impact on performance/returns could we expect?


Would love to hear your experiences or any examples you’ve seen!

Thanks in advance .

More volatility, more returns, less exposure to inflation.

[seajay]

Use a 2x leveraged stock fund for the 'stock' third.

Thirds each 2x stock, gold, cash

Gold in hand, safest cash (T-Bills/short term treasury).

Exposure of 66% stock, 33% gold, 33% cash, 33% borrowed (by the leveraged ETF). Reduced counter-party risk, benchmark to 67/33 stock/bond and better reward, lower volatility, better SWR outcomes (since 1955 using synthetic 2x stock for pre actual 2x stock availability).

PV more recent years data https://www.portfoliovisualizer.com/bac ... TuKyyhCFVw

[frugal]

Use a 2x leveraged stock fund for the 'stock' third.

Thirds each 2x stock, gold, cash

Gold in hand, safest cash (T-Bills/short term treasury).

Exposure of 66% stock, 33% gold, 33% cash, 33% borrowed (by the leveraged ETF). Reduced counter-party risk, benchmark to 67/33 stock/bond and better reward, lower volatility, better SWR outcomes (since 1955 using synthetic 2x stock for pre actual 2x stock availability).

PV more recent years data https://www.portfoliovisualizer.com/bac ... TuKyyhCFVw

No Long Term Bonds !?

[Smith1776]

I have run into the same conundrum. I personally don't like an explicit allocation to cash within my portfolio. Rather, I like my cash to be an entirely separate consideration.

The way I've reconciled this with PP-esque strategies is to use a 50% total bond market fund in place of the cash + long-term bond barbell. This allows me to mentally separate my cash/emergency fund outside the portfolio with the cash equivalent portion inside the portfolio. It has also the benefit of taking out the guesswork of exactly how long the long-term bond portion of your portfolio should be. Just let the total market dictate all of that.

[boglerdude]

ibonds are cash. we're only getting a return on long bonds if they do QE. No one needs to borrow your money and give you a real return. Government took your low risk returns by taking over student loans and mortgages. On top of that, shrinking skilled labor pool

[seajay]

Use a 2x leveraged stock fund for the 'stock' third.

Thirds each 2x stock, gold, cash

Gold in hand, safest cash (T-Bills/short term treasury).

Exposure of 66% stock, 33% gold, 33% cash, 33% borrowed (by the leveraged ETF). Reduced counter-party risk, benchmark to 67/33 stock/bond and better reward, lower volatility, better SWR outcomes (since 1955 using synthetic 2x stock for pre actual 2x stock availability).

PV more recent years data https://www.portfoliovisualizer.com/bac ... TuKyyhCFVw

No Long Term Bonds !?

Not a fan of lending - especially to someone who gets to set the terms and conditions and can direct money printing (debasement), inflation and taxation. Would rather add to each of stock/gold/cash than hold LTT (that said at times (when yields are above average) they may have appeal).

[yankees60]

Use a 2x leveraged stock fund for the 'stock' third.

Thirds each 2x stock, gold, cash

Gold in hand, safest cash (T-Bills/short term treasury).

Exposure of 66% stock, 33% gold, 33% cash, 33% borrowed (by the leveraged ETF). Reduced counter-party risk, benchmark to 67/33 stock/bond and better reward, lower volatility, better SWR outcomes (since 1955 using synthetic 2x stock for pre actual 2x stock availability).

PV more recent years data https://www.portfoliovisualizer.com/bac ... TuKyyhCFVw

No Long Term Bonds !?

Not a fan of lending - especially to someone who gets to set the terms and conditions and can direct money printing (debasement), inflation and taxation. Would rather add to each of stock/gold/cash than hold LTT (that said at times (when yields are above average) they may have appeal).

I love TIPS!

[mathjak107]

not a fan of tips for all the reasons tyler wrote about

[yankees60]

not a fan of tips for all the reasons tyler wrote about

There is nothing else available that is inflation protection guaranteed.

[mathjak107]

if you read tyler’s take on them they are not guaranteed to beat inflation because of how they work and in fact it was almost a coin toss as to whether they beat inflation.

the base base rate is set by a guess as far as future inflation.

as guesses go they only guessed right about half the time

if they guess right about future inflation then the inflation adder plus the base rate keeps you ahead .

if they guess wrong than traditional bonds win