Sanity Check on AA

[PatrickW]

I'm 59, have $1.4M in IRA's and 401k's, along with about a year's worth of cash to cover living expenses. Wife is retired, and I plan to retire in 6 months.

Historically I've invested in Index Funds/ETF's. VTI and QQQ primarily. I'm now moving towards a more defensive posture in the interest of sleeping better at night while still being able to maintain my standard of living.

From my research using Portfolio Visualizer, it seems to me that the following Asset Allocation is hard to beat, with respect to starting with 1.4M and drawing down $6k per month and rebalancing:

20% VWINX (Vanguard Wellesley)
20% VWELX (Vanguard Wellington)
20% VEIPX (Vanguard Equity-Income)
20% INIVX (Gold - I actually own GLD, but use INIVX in Portfolio Visualizer for more history)
20% QQQ (Nasdaq 100)

One investment that I have that I hardly ever see anyone else here mentioning is owning a Gold ETF. From playing with Portfolio Visualizer, it seems to be a no brainer that you want 10% to 20% Gold in your asset allocation.

Am I missing anything, or is my understanding faulty...?

Here's the link to these numbers in Portfolio Visualizer: https://www.portfoliovisualizer.com...ocation5_1=20&symbol6=VTSMX&allocation6_2=100

Patrick

 

[OldShooter]

... Am I missing anything, or is my understanding faulty...? ...

Maybe. The easiest thing in the world is to come up with a winning portfolio by backtesting. Unfortunately, Portfolio Visualizer is not an oracle and backtesting isn't predictive.

I find PV to be very useful for comparing the historical performance of various funds and portfolios. Note: comparing. Not predicting.

If backtesting were predictive, everyone would be rich.

 

[mrfeh]

Maybe. The easiest thing in the world is to come up with a winning portfolio by backtesting. Unfortunately, Portfolio Visualizer is not an oracle and backtesting isn't predictive.

+1

OP - I suggest you stick with your index funds.

 

[OldShooter]

@PatrickW, if you are interested in exploring further, I recommend
"the signal and the noise" by Nate Silver https://www.amazon.com/Signal-Noise-Many-Predictions-Fail-but/dp/0143125087 (Subtitle is: "Why So Many Predictions Fail--but Some Don't")

Like @mrfeh I suggest that you stick with index funds, but maybe an international fund to supplement VTI and ditching QQQ, which is a marketing success but, because it is a narrow sector fund, is generally a bad idea.

 

[target2019]

Portfolio Visualizer is 100% accurate looking backwards.