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 a balanced portfolio?
A balanced portfolio is a portfolio built with just stocks and bonds.
Balanced portfolios are the backbone of investment portfolios. The balanced portfolios can be built with just 2 ETFs. They are a mix b to between 10% and 90% equities with the rest allocated to bonds.
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How do you build a balanced portfolio with ETFs?
Here is how you build the Balanced Portfolio 80/20 portfolios with ETFs
- 80.00% US Total Stock Market (VTI)
- 20.00% Total US Bond Market (BND)
What is the return of the balanced portfolios?
Below you can see the historical return of the balanced portfolios. Notice the increasing returns as more stocks are added.
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 |
|---|---|---|---|---|---|---|---|
| Balanced Portfolio 10/90 | 0.72 | -13.75 | 2.17 | 5.84 | -13.75 | 0.04% | 2.46 |
| Balanced Portfolio 20/80 | 2.49 | -14.39 | 3.33 | 6.44 | -14.39 | 0.04% | 2.37 |
| Balanced Portfolio 30/70 | 4.25 | -15.03 | 4.48 | 7.02 | -15.03 | 0.04% | 2.27 |
| Balanced Portfolio 40/60 | 6.02 | -15.67 | 5.61 | 7.56 | -15.67 | 0.04% | 2.17 |
| Balanced Portfolio 50/50 | 7.78 | -16.31 | 6.72 | 8.08 | -16.31 | 0.04% | 2.08 |
| Balanced Portfolio 70/30 | 11.31 | -17.59 | 8.91 | 9.02 | -24.35 | 0.03% | 1.88 |
| Balanced Portfolio 80/20 | 13.07 | -18.23 | 9.98 | 9.45 | -28.56 | 0.03% | 1.78 |
| Balanced Portfolio 90/10 | 14.83 | -18.87 | 11.03 | 9.84 | -32.78 | 0.03% | 1.69 |
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 do the Balanced portfolios 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 |
What is a balanced portfolio?
The balanced portfolios consist of two asset classes, stocks, and bonds. They are the simplest portfolios to implement. What they lack in flair and sexiness they make up for in simple effectiveness. They can be modelled to almost any risk level.
John Bogle, the supreme hero of the investing world, recommends that you hold a total stock market fund and a total bond fund.
John C. Bogle of Vanguard early in his career.
John C. Bogle of Vanguard early in his career.
The rule for balanced portfolios
A rule of thumb is that the percentage of bonds should equal your age, so a 50-year-old should hold 50% VTI (stocks) and 50% BND (bonds).
This may be too conservative for many.
Stocks have historically outperformed bonds, so holding a good portion of your portfolio in stocks for as long as possible is recommended. Stocks are riskier than bonds, so you should check your appetite for risk. The best portfolio is the portfolio that you are going to stick with.
You could argue that all portfolios are relatives of the balanced portfolios. Other portfolios simply slice up the stock and bond portions of the portfolio. For example, instead of just US Total Stock Market, you can add international stocks, or small-cap stocks, and so forth. For the bond portion, you can add TIPS or corporate bonds and so forth.
There are a lot of alternatives to a balanced portfolio. The most obvious choice would be to check out the Three Fund portfolio. The three-fund portfolio adds international stocks to the mix. There are many more wonderful portfolios.
If you want to find a high performing simple portfolio you want to limit the number of asset classes in your portfolio. In our overview of investment portfolios on this page you can see how many asset classes the portfolios have. For a simple portfolio try to keep the number of asset classes below eight. This still leaves a lot of wonderful portfolios.
What is the asset allocation for balanced portfolios?
Here are the asset allocations for balanced portfolios
Balanced Portfolio 10/90
- 10.00% US Total Stock Market (VTI)
- 90.00% Total US Bond Market (BND)
Balanced Portfolio 20/80
- 20.00% US Total Stock Market (VTI)
- 80.00% Total US Bond Market (BND)
This portfolio is also very close to JL Collins’ Wealth Preservation Portfolio on Portfolioeinstein.com
Balanced Portfolio 30/70
- 30.00% US Total Stock Market (VTI)
- 70.00% Total US Bond Market (BND)
Balanced Portfolio 40/60
- 40.00% US Total Stock Market (VTI)
- 60.00% Total US Bond Market (BND)
Balanced Portfolio 50/50
- 50.00% US Total Stock Market (VTI)
- 50.00% Total US Bond Market (BND)
Balanced Portfolio 60/40
- 60.00% US Total Stock Market (VTI)
- 40.00% Total US Bond Market (BND)
The 60/40 portfolio is called “the benchmark portfolio” and is often a benchmark for pension funds, institutions, family offices, etc. Read more about the 60/40 in Meb Faber’s very recommended book Global Asset Allocation: A Survey of the World’s Top Asset Allocation Strategies.
We go into much more detail of this portfolio in our post The 60/40 Portfolio – The Classic Portfolio.
Balanced Portfolio 70/30
- 70.00% US Total Stock Market (VTI)
- 30.00% Total US Bond Market (BND)
Balanced Portfolio 80/20
- 80.00% US Total Stock Market (VTI)
- 20.00% Total US Bond Market (BND)
Balanced Portfolio 90/10
- 90.00% US Total Stock Market (VTI)
- 10.00% Total US Bond Market (BND)
Alternatives to the balanced portfolio
There are many alternatives to balanced portfolios. The 60/40 balanced portfolio is a good starting point. A good way to improve upon the balanced portfolio in terms of returns is to break up the stock and bonds portfolio into small slices.
The ultimate portfolio from Paul Merriman does just that. Many target-date funds also do this.
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
What does a good portfolio look like?
A good portfolio will help you reach your financial goals with certainty. The timeframe is the most important factor to consider. This means that you need a big portion of stocks if your goal if far into the future and fewer stocks if your goals is in the near future.
What does a balanced portfolio look like?
A balanced portfolio consists of two asset classes. The two asset classes are stocks and bonds. The proportion that each asset class makes up in your portfolios can vary depending on your timeframe.
