The Golden Butterfly: five equal parts, with gold and small companies
Twenty percent each in US stocks, small US companies, long bonds, short bonds and gold. A calmer cousin of Harry Browne's permanent portfolio.
The rule
Keep 20% of the account in each of five assets: large US stocks, small US companies, long-term government bonds, short-term government bonds and gold. Once a year, bring every part back to 20%.
Why people use it
It was devised by Tyler, the author of the Portfolio Charts website, as a variant of Harry Browne's permanent portfolio. Browne's four parts stay (stocks, long bonds, gold, and a safe short-term part), and a slice of small companies is added. The idea is that something always works: stocks and small companies in growth, long bonds in recessions, gold in inflation, short bonds in a crunch. Two stock parts out of five give it more growth than the original.
Where it hurts
Only two fifths of the money is in stocks, so in strong stock years it trails a plain stock fund. Gold earns no income and can go sideways for years. Long bonds fell hard when interest rates rose, and the portfolio felt it.
How our bot runs it
20% each in SPY (the S&P 500), IWM (small US companies, standing in for the small value stocks of the original), TLT (Treasuries over 20 years), SHY (Treasuries of 1 to 3 years) and GLD (gold). The split is restored on the first trading day of January.
Live account
A virtual $100,000 account that follows this rule. Every trade is on the bot's page.
| Bot | Account | Return |
|---|---|---|
| The Golden Butterfly (Portfolio Charts) | $99,285 | −0.72% |
More guides
How much in stocks, how much in bonds: a ladder from 80/20 to 25/75
The Golden Butterfly: five equal parts, with gold and small companies
How much in stocks, how much in bonds: a ladder from 80/20 to 25/75
Portfolios
Golden Butterfly
Origin and history since 1926
Portfolio builder
Set the shares of stocks, bonds, gold or take famous models, mix them, and see how such a portfolio lived through every era of history.
Goal finder
Say what you need — for example, 6 % a year over 10 years with a drop no deeper than −25 % — and see which models and mixes met it, and in what share of historical periods.
Retirement: how much to withdraw
The 4 % rule tested on 60 portfolios: which share of the money you could take out every year, and when it failed.