How To Build The Golden Butterfly Portfolio (VERY LOW RISK)

In today's video, we're going to analyze the Golden Butterfly portfolio, which is almost a hybrid of Ray Dalio’s all-weather portfolio which I reviewed earlier this year on this channel.

This will be similar to my other videos dissecting the lazy portfolio aka the 3 fund portfolio, and this golden butterfly portfolio is actually a lazy portfolio in and of itself, given your risk tolerance.

So Here’s a clue, this is a very risk-averse portfolio, and 60% of it contains investments that I probably wouldn’t recommend investing in today given the current macro environment.

However, as investors, we must keep an open mind and be open to hearing all different types of portfolios and seeing different types of investment philosophies in order to stay Sharp.

In this video, I’m going to explain what the Golden Butterfly portfolio is, what assets it contains, and some of its past performance which I think you'll be slightly surprised by.

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⏰ Timestamps ⏰:
0:00 - Intro
1:07 - What is The Golden Butterfly Portfolio
2:00 - What Assets Are Included?
2:40 - Golden Butterfly Breakdown
3:20 - Wealthfront Spot
5:15 - Portfolio Breakdown (con't)
9:40 - Golden Butterfly Backtest
15:19 - LOL

Marko - WhiteBoard Finance receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for sponsored advertising materials. Marko - WhiteBoard Finance is not a client and this is a paid endorsement. Marko - WhiteBoard Finance and Wealthfront Advisers are not associated with one another and have no formal relationship outside of this arrangement. Nothing in this communication should be construed as a solicitation, offer, or recommendation, to buy or sell any security. Any links provided by Marko - WhiteBoard Finance are not intended to imply that Wealthfront Advisers or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise. Investment management and advisory services are provided by Wealthfront, an SEC registered investment adviser. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance.

[WhiteBoardFinance]

This portfolio is personally too conservative for me, but still interesting to view the backtested results at the end!

[mikey]

Opinions on the market diverge; some claim overvaluation due to rapid gains, while others cite strong economic fundamentals justifying high valuations. The notable surge in tech stocks, raises concern for my $600K portfolio given the index's increased tech concentration. What stocks, in terms of growth over the next ten years, could be the next APPL is my query.

[blessingpaul]

Now I have more knowledge about personal finance. I just subscribed to your channel. Big ups to everyone working effortlessly trying to earn a living while building wealth in this recession. I’m 45 and my husband is 51, we are both retired, no debts. We are planning on relocating to Thailand. We are currently living a frugal and financially savvy lifestyle and generating passive income even during this recessionary period. Our commitment to saving and investing in the financial market has enabled us to maintain this lifestyle and continue earning monthly passively through investment!"

[mikestevens]

My take-home: if your time horizon is long, avoid this and stick with mostly equities. If, due to your age or situation, you cannot tolerate a deep/long drawdown period, this might be a good option for you.

[stjepanhauser]

Interesting, the stock market is currently experiencing a decline while bond yields are on the rise. However, there seems to be skepticism amongst investors regarding the Federal Reserve's plan to continue increasing interest rates until inflation is stabilized. As for myself, I find myself at a crossroads, uncertain whether to liquidate my $250, 000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current bear market.

[tatianapetrov]

What are your thoughts on ETFs and Stocks with dividends?

[jackdguida]

I realize I'm commenting on a 1 year old video but I wanted to point out the main point of this portfolio. It is clearly not for someone who is in the accumulation phase of their investing career, but if you plug it into a safe withdrawal rate calculator* you'll see that it can tolerate 5 or 6% annual withdrawals, adjusting for inflation, without running out of money, compared to an all stock or 60/40 portfolio which can barely tolerate 4% withdrawals. This is a great retirement portfolio.

*On Portfolio Visualizer, take the same analysis you did in the video, set the fixed annual withdrawal amount to $600 (=6% from a $10000 portfolio), adjusted for inflation and start at the beginning of a bear market, such as 2000. You'll see that the all-stock portfolios die out before the time period ends while the golden butterfly keeps on trucking.

[eljefex]

Always click the like button at the beginning of any of Marko’s videos . Always good to stay sharp, I see it as a learning classroom, knowledge we can always use . Makes sense for the golden butterfly when investors are looking to stay safe and not be risky investors .

[conduit]

Please review the Dragon portfolio…also so curious what this would look like shifting gold to Bitcoin and short term treasuries to short term TIPS or muni tips. Also everyone ignores post-tax analysis!

[princessjoymillani]

This was actually really great, and yes I was definitely surprised by the results of this type of portfolio, has me thinking! Thank you Marko, as usual for an amazing video! God bless ⭐💫💫

[mendoblendo]

Index funds or mutual funds is thr way to go for safe broad exposure.
Waste management is a good one as well

[Konuvis]

What's interesting the comparison graph is that even during the crashes the market just basically meets up with the more balanced portfolio so it makes no sense not too go total market.

[EthanRaynolds]

I have added a variety of stocks and ETF to my present holdings for the long term. I also have $300k aside to start following inflation-indexed bonds and stocks of companies with solid cash flow. I strongly believe this is a good time to capitalize on the market for long term gains. But actualizing a short term profit would not be a bad idea for me at all.

[Harmsyx]

It would be interesting to see what the impact of drawing down each of those portfolio's you backtested at 4% per year looks like, I imagine this is where the golden butterfly would look preferable and show why someone may give up on the 2x gains.

[AJ-rclr]

Hello Marko, very good video, actually this portfolio might not be good for US, but elsewhere ( for example where i come from, Indonesia ) we do have a very good returns on government bonds and corporate bonds, you will be surprised by how much is the government bonds fund interest per annum is, it's anywhere between 7-9% with low fee at 0, 22% and corporate bonds as high as 9-11% yearly with slight higher fee at 0, 5-0, 8%. which is still acceptable.

So you see, this low risk portfolio of yours is actually going to make a very good portfolio for some people from different country, i would totally follow this Golden Butterfly portfolio, but i would swap the Gold with International Index Fund

[dieyoung]

How many stocks do you need to buy from Old Navy to receive a free vest with the awesome chest pockets.

[tomthetalker]

Investing in stocks or real estates are very good ideas though real estate investment seems a bit more complex. Who else is in line with me?

[tyjameson]

Epic diversification 👍🏼❤️🙌🏼🎉Marko is the bomb 💣

[RobT]

I honestly like this portfolio, is something that I would shift to in retirement.

[yorbendereuse]

Quick question, why didn't you include real estate?
In my opinion it's one of the safest plays out there since everyone needs a place to sleep or parkt their cars or etc.
But yet, why are you putting 40% in bonds while they are paying next to nothing and are actually losing a lot of money due to inflation?