The Permanent Portfolio: Learn to Build It With ETFs

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.

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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 November 2022, 11:40 ET

NameYear to dateReturn in 202110 year returnCAGR since 1989 (%)STDEVDraw DownExpense ratioYield
The Permanent Portfolio-16.44.246.097.155.87-3.15%0.14%1.18
Performance for the Permanent portfolio

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.

NameSee PortfolioYear to dateReturn in 202110 year returnCAGR since 1989 (%)Draw Down
Premium PortfolioPremium-20.9732.1413.211.81-35.43%
Premium PortfolioPremium-18.728.7816.5211.28-37.63%
Premium PortfolioPremium-19.6425.6716.2911.25-37.00%
Premium PortfolioPremium-23.9913.4911.0311.21-44.87%
Premium PortfolioPremium-12.028.1714.4711.14-35.26%
Premium PortfolioPremium-14.924.7511.8510.99-36.46%
Premium PortfolioPremium-14.7929.0213.1510.99-40.85%
Premium PortfolioPremium-20.620.711.4510.93-37.91%
Premium PortfolioPremium-15.1224.5111.8710.88-36.35%
Premium PortfolioPremium-19.3822.9214.9910.85-32.77%
The 10 Best Performing Portfolios That We Have Benchmarked

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 thePermanent Portfolio?

Harry Browne designed his portfolio to do well in almost any market situation. It is easy to understand and implement. The permanentportfolio has 4 asset classes each betting on a particular market climate. It is described in his book Fail-Safe Investingand 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 ofbad 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 adeflation. Bonds also do reasonably well during prosperity.
  4. Cash– During arecession, 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 forPermanent Portfolio

harry-browne-the-permanent-portfolio

What are the advantages and disadvantages of the Permanent portfolio

Here are the advantages of the Permanent portfolio

  • The portfolios is very easy to understand and implement.
  • It has great downside protection – it has had low drawdown of -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.

Here are the disadvantages of the Permanent portfolio

  • The portfolios may be too conservative with its 25% incash (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.

Where can I learn more about the Permanent portfolio?

Go here for a rebalance excel worksheet.

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

Suggestions for your next steps

Finding the right portfolio is hard. Maintaining your portfolio is also daunting.

If you want access to our high-performing portfolios then you want to take a look at the premium portfolios.

This is a paid product that gives you the 20 best-performing portfolios since 1989. The portfolios represent a great opportunity low-cost for you to get more money from your investment portfolios. We think it’s a no-brainer. The 20 portfolios are the best among the literally hundreds of other portfolios we have benchmarked since we started.

You stand to gain thousands more dollars EACH YEAR for the price of a few months of Netflix.

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 can increase your returns.

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.