The Permanent Portfolio: Learn to Build It With ETFs

Learn to build the Permanent Portfolio with ETFs. See how it compares to other portfolios.
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What is the Permanent Portfolio?

The Permanent Portfolio can be built with 4 ETFs. It is exposed to 25% stocks, 25% bonds, 25% gold, and 25% cash. It is a low-risk portfolio.

For the past 10 years, the The Permanent Portfolio has returned 6.62 with a standard deviation of 5.87. The dividend yield is 1.18. The 30-year return is 7.25%. Year to date the The Permanent Portfolio Portfolio has returned -0.08%%

What is the historical return of the Permanent Portfolio?

Below you can see the historical return of the Permanent Portfolio.

Data was last updated on October 1, 2021 at 04:21 a.m. ET

NameAsset class countYear to dateReturn in 202010 year returnCAGR since 1989 (%)Risk levelExpense ratio
The Permanent Portfolio4-0.08%16.156.627.2510.14%

How does the Permanent portfolio compare to the best portfolios?

Below you can see the returns of the best portfolios that we have benchmarked.

NameSee PortfolioYear to dateReturn in 202010 year returnCAGR since 1989 (%)Draw Down
Premium Portfolio15.92%18.2913.8410.77-37.63%
Premium Portfolio8.30%18.118.6311.14-44.87%
Premium Portfolio13.48%19.712.8410.49-32.77%
Premium Portfolio20.78%3.198.5210.59-36.46%
Premium Portfolio20.17%3.668.6210.48-36.35%
Premium Portfolio15.18%21.0313.7810.83-37.00%
Premium Portfolio19.24%8.711.5610.65-35.26%
Premium Portfolio15.41%7.488.3910.64-37.91%
Premium Portfolio16.16%5.3610.8811.23-35.43%
Premium Portfolio20.81%3.4210.2110.47-40.85%

How do you build the Permanent Portfolio with ETFs?

Here is how you build the Permanent Portfolios 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?

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 betting on a particular market climate. It is described in his book Fail-Safe Investing and in The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy.

The permanent portfolio is made out of 4 asset classes. Each asset class protects against a certain economic climate. The asset classes are:

  1. Stocks – for profit during periods of general prosperity and/or declining inflation.
  2. Gold – for profit during periods of bad inflation; during inflationary episodes gold bullion provides protection against a falling currency and other potential problems.
  3. Long-Term Bonds – for profit during periods of declining interest rates; and especially during a deflation. Bonds also do reasonably well during prosperity.
  4. Cash – During a recession, no particular 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 Permanent Portfolio

harry-browne-the-permanent-portfolio

Advantages and disadvantages of The Permanent Portfolio

Advantages

  • The portfolios is very easy to understand and implement.
  • It has great downside protection – a drawdown of only -13.48%.
  • You get to hold 25% of your portfolio in gold.
  • The portfolio bets on every possible market scenario negating FOMO.
  • The Permanent Portfolio is Sleep safe portfolio.
  • It is a low-risk portfolio.

Disadvantages:

  • 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.

Resources

Go here for a rebalance excel worksheet.

There are two good books on the Permanent Portfolio. One is Harry Browne’s own book “Fail-Safe Investing”

The other book is The Permanent Portfolio: Harry Browne’s Long-Term Investment Strategy, a great and detailed read on why the strategy works.

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio 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.

Rebalancing lowers your portfolio risk and may increase your returns.


If you want access to our high-performing portfolios then you need to take a look at the premium portfolios. This is a paid product that gives you the 59 best-performing portfolios since 1989. The portfolios represent a great opportunity for you to have a shot at increasing the returns of your portfolio.

Portfolioeinstein Premium Portfolios

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 but 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 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.

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