💼 Cash Management in HB-PP: To Rebalance or Not? 🔄

[frugal]

Hello everyone,

At the moment, the cash portion within my HB-PP portfolio stands at only 10%, while the HB-PP allocation represents roughly 20% of my total assets.

I am wondering whether it would make sense to rebalance the cash component within the HB-PP itself, or if maintaining this relatively low cash level is acceptable, given that I can access additional liquidity outside the HB-PP portfolio when needed.

Specifically, I am trying to understand the trade-offs between keeping a higher cash buffer internally—potentially reducing portfolio returns—and relying on external liquidity sources.

I would greatly appreciate any insights, experiences, or best practices from those who have faced a similar scenario. How do you typically approach cash management within a concentrated allocation like HB-PP while maintaining overall portfolio flexibility?



Wishing everyone a successful and prosperous 2026!

[mathjak107]

if you are holding long term bonds then the cash represents the other half of the barbel, that brings down the volatility and duration of the long term bonds

[dualstow]

Of course it’s not just about liquidity, as you noted when you wrote

potentially reducing portfolio returns

I have a lot of stocks in vp, so it’s easy for me to hold lots of cash in the pp (way more than 10% of pp)
It does feel good to have cash when stocks come way down and stay down.

I would either get cash up to 15-25% or, if you’re pro stocks, just admit that you don’t have a pure pp, call it something else, and rely on your external reserves.

[mathjak107]

after a while it’s like trying to be a little bit pregnant .

if you aren’t following the portfolio as designed then you can do as you like .

that’s a call no one else can make for you .

most who are waiting for that proverbial fall in stocks gave up so much over the years they won’t ever get back to what they could have had .

in fact most would not commit large sums back in to a plunging market that either looks like it has no bottom or it’s a suckers rally.

so do what meets your goals.

if you are where you need to be financially then cut back .

otherwise. you still need the growth and can’t afford to miss it

[frugal]

Hey everyone!

Following up on my previous post, I’m curious about a PP-style portfolio with a 33-33-33% allocation (equities / bonds / gold ).

I’m trying to understand:

How would the overall risk change compared to a more traditional allocation?

What kind of impact on performance/returns could we expect?


Would love to hear your experiences or any examples you’ve seen!

Thanks in advance .

[Jack Jones]

Hey everyone!

Following up on my previous post, I’m curious about a PP-style portfolio with a 33-33-33% allocation (equities / bonds / gold ).

I’m trying to understand:

How would the overall risk change compared to a more traditional allocation?

What kind of impact on performance/returns could we expect?


Would love to hear your experiences or any examples you’ve seen!

Thanks in advance .

More volatility, more returns, less exposure to inflation.

[seajay]

Use a 2x leveraged stock fund for the 'stock' third.

Thirds each 2x stock, gold, cash

Gold in hand, safest cash (T-Bills/short term treasury).

Exposure of 66% stock, 33% gold, 33% cash, 33% borrowed (by the leveraged ETF). Reduced counter-party risk, benchmark to 67/33 stock/bond and better reward, lower volatility, better SWR outcomes (since 1955 using synthetic 2x stock for pre actual 2x stock availability).

PV more recent years data https://www.portfoliovisualizer.com/bac ... TuKyyhCFVw

[frugal]

Use a 2x leveraged stock fund for the 'stock' third.

Thirds each 2x stock, gold, cash

Gold in hand, safest cash (T-Bills/short term treasury).

Exposure of 66% stock, 33% gold, 33% cash, 33% borrowed (by the leveraged ETF). Reduced counter-party risk, benchmark to 67/33 stock/bond and better reward, lower volatility, better SWR outcomes (since 1955 using synthetic 2x stock for pre actual 2x stock availability).

PV more recent years data https://www.portfoliovisualizer.com/bac ... TuKyyhCFVw

No Long Term Bonds !?

[Smith1776]

I have run into the same conundrum. I personally don't like an explicit allocation to cash within my portfolio. Rather, I like my cash to be an entirely separate consideration.

The way I've reconciled this with PP-esque strategies is to use a 50% total bond market fund in place of the cash + long-term bond barbell. This allows me to mentally separate my cash/emergency fund outside the portfolio with the cash equivalent portion inside the portfolio. It has also the benefit of taking out the guesswork of exactly how long the long-term bond portion of your portfolio should be. Just let the total market dictate all of that.