Conservative portfolio for the masses

[MachineGhost]

If you're basing that on simba's spreadsheet, be aware that you want to do 5-year Treasury ladder to get close to VFITX's duration without the principal/interest rate risk and for higher returns.

I wouldn't underestimate people's intelligence about the PP just because they are lower middle class.  People that rely on financial advisor's to do their thinking for them dont necessarily keep up with the markets.  It's the ones that think they are smart that you got to watch out for.

[Pointedstick]

That's a good portfolio. I was actually thinking of this very subject yesterday as a result of the "opting out of social security" thread and came up with a nearly identical portfolio.

This is the portfolio I would recommend to my financially super conservative father who's currently in like 100% money market funds. 

[BP]

Both should meet your criteria over any time frame tested and are less volatile than the PP, but have a definite PP outlook.  All are index funds.

Portfolio One:
25% Small Cap. Value stocks
50% 5 year treasuries
25% TIPS

Portfolio Two:
10% Total Stock Market
10% Small Cap Value stocks
5%  Emerging markets stocks
50% 5 year treasuries
10% TIPS
15% Gold

[Ad Orientem]

I think the PP is quite easy for most people to implement though I concede that many people are certain to have difficulty with it since it requires embracing asset classes we may not really like. With that caveat out of the way my advice to a working class - middle class investor who was not ready to embrace the PP would be...

85% VWINX
15% Gold

Alternatively
50% BND
35% VTI (or VT)
15% Gold

And enough cash on the side to ride out two years of unemployment. Note that doesn't mean two years of normal income but rather enough cash to cover the essentials i.e. food shelter health care and transportation.

[melveyr]

I agree with most of the earlier portfolios. I think replacing the barbell with total bond market is the first step in simplifying the PP into something more digestible. I also think that a tilt towards equities makes sense because people always compare themselves to the stock market even though it is irrational. Having a tilt helps you feel as if you are participating in the party, which has psychological benefits. I also think under weighting gold versus the PP has psychological benefits because it is so different from the mainstream. However, deep down inside most investors acknowledge that a small allocation makes a ton of sense.

I would propose...

60% total bond market
30% global equities
10% gold

[Dieter]

VTINX (Vanguard Retirement Income - 30% US/Intl Stock, 20% TIPS, 45% Total Bond)
5-10% Gold

Maybe add VWINX if want value tilt and more corp bond....

[melveyr]

VTINX (Vanguard Retirement Income - 30% US/Intl Stock, 20% TIPS, 45% Total Bond)
5-10% Gold

That's a nice one. Quite simple, and some 401k plans even offer that. Also pretty soon that fund will also include a slice of hedged foreign bonds which is kind of interesting.

We are all really just a bunch of conservative bogleheads who appreciate the benefits of gold 

[cnh]

VTINX (Vanguard Retirement Income - 30% US/Intl Stock, 20% TIPS, 45% Total Bond)
5-10% Gold

That's a nice one. Quite simple, and some 401k plans even offer that. Also pretty soon that fund will also include a slice of hedged foreign bonds which is kind of interesting.

We are all really just a bunch of conservative bogleheads who appreciate the benefits of gold 

Along with adding hedged foreign bonds to VTINX, Vanguard is converting the standard TIPS portion to a short-term TIPS portion--duration 2-3 years--which some studies show is a better inflation hedge that standard TIPS.  70% VTINX, 5% VISVX (Small-Cap Value Index) and 25% gold gives one 25% gold and about 26% indexed equities with a small value tilt, 18% short-duration bonds (14% short-term TIPS and 4% money market fund) and 31% intermediate-duration indexed bond.  Bond exposure is not pure treasuries, but the simplicity has some appeal.