The Balanced Portfolio
Market timing with my models requires infrequent but active portofolio management. Many investors are better off with passive investing. This means placing money into a balanced asset mix of index funds. This approach is detailed in my free book available from the main page of the website.
The Balanced Portfolio (Smart #1 in my book) is totally passive and the returns below assume there was no market timing and assets were reallocated each year to the recommended proportions. There will be losing years but they will be much lower than the great majority of investment plans. This portfolio beats pension funds over most time periods.
Annual Returns of the TGR Balanced Portfolio - 1982 to 2008
82 |
83 |
84 |
85 |
86 |
87 |
88 |
89 |
90 |
91 |
92 |
93 |
19.0 |
18.9 |
8.2 |
26.8 |
21.4 |
8.9 |
17.5 |
14.8 |
-2.1 |
19.0 |
7.8 |
15.3 |
94 |
95 |
96 |
97 |
98 |
99 |
00 |
01 |
02 |
03 |
04 |
05 |
06 |
07 |
08* |
1.3 |
20.1 |
14.1 |
15.7 |
6.2 |
7.9 |
7.8 |
0.4 |
-2.3 |
24.4 |
12.9 |
8.0 |
14.6 |
4.0 |
-22.8 |
We advise that you invest the majority of your money in a self directed asset allocation strategy and avoid over-concentration of capital. This is the key to wealth building and financial peace of mind. A proper portfolio will protect your assets from ignorance, crashes, and reckless speculation. The Balanced Portfolio isn't the only way to asset allocate but it does work very well.
The Balanced Portfolio uses mostly low cost Vanguard index funds. You don't need to pay an advisor 1-2% of your assets every year or pay high fees to financial services firms. Our Balanced Portfolio is totally no-load and has half the stock market risk of the S&P500.
The TGR Balanced Portfolio
Vanguard Total International Stock Index Fund (VGTSX) – 15%
Vanguard 500 Index Fund (VFINX) – 15%
Vanguard Small Cap Value Index (VISVX) – 15%
Commodities (PCRIX) - 10% (optional: 10% (GLD)/Gold Coins)
Vanguard Total Bond Market Index Fund (VBMFX) – 30%
Vanguard REIT Index (VGSIX) - 10%
Money Market – 5%
*(Portfolio can be significantly enhanced using our market timing strategies. For example, the TGR stock model was out of stocks in 2008. Thus the Balanced Portfolio would have had a loss of -2.3% in 2008 versus a loss of -20% for the standard 60/40 stock-bond mix used by most investment advisors.)