Long term performance of different portfolios

I happened to see a YouTube video which referred to a website called “PortfolioCharts”. Well, that’s a seriously interesting site. I could lose myself there for a few days at least.

Whilst my portfolio of 100% equities does have the highest average return in theory, it suffers in all other measures. The analysis is based on historical asset returns, particularly US stocks. It’s also assuming that I want to draw a steady income, whereas I’m happy to cut my income to suit in poor years (well, that’s what I’m saying for now). I am more globally diverse than many of their portfolios, and with rebalancing that mitigates some of the volatility.

It does make me think that the portfolio that suits long term growth WITHOUT withdrawals (i.e. building my SIPP during my years of employment) is not the same as a portfolio that suits withdrawals, whether or not I cut back in poor years.

As it says in their commentary, some measure and rankings favour reducing volatility. I do consider that by the time I’m in my mid-seventies I’ll need a portfolio that runs itself without huge analysis, and I might not be so adaptable to varying income each year. So I now have many hours of fun ahead looking at their analysis of the various portfolios.

ADDITIONAL NOTE: After a bit of time playing with PortfolioCharts, I’ve added some thoughts to my page on “Balancing”.

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