The Golden Butterfly Portfolio by Tyler prioritizes consistently desirable investment growth by balancing economic conditions with an eye towards prosperity.
- 20% Total Stock Market
- 20% Small Cap Value
- 20% Long Term Bonds
- 20% Short Term Bonds
- 20% Gold
When I first wrote about the Golden Butterfly, I chose large cap blend to clearly contrast that portion of the portfolio from small cap value. When Portfolio Charts grew to include more countries, however, I switched to a total stock market fund (along with several other portfolios) to better translate data between markets. Because TSM funds are by definition 85% LCB, the numbers should be very similar either way. But you can also see the difference for yourself using the My Portfolio tool.
Find country-specific versions and appropriate ETFs using the Performance charts.
The Golden Butterfly is built on the idea of economic risk parity, similar to the Permanent Portfolio which shares four of its five assets. But while the Permanent Portfolio equally balances prosperity, recession, inflation, and deflation, the Golden Butterfly tilts the assets towards prosperity with an additional allocation to small cap value.
While to some that may seem like a trendy choice destined to underperform, the data reveals a remarkable truth. The Golden Butterfly is one of the best risk-adjusted portfolios out there, pairing the famous consistency of the Permanent Portfolio and the growth rates of far more aggressive options. With a tight band of growth paths that are helpful for future estimates and notably high withdrawal rates that are great for retirees, it’s a particularly dependable portfolio option suitable for both accumulators and retirees alike.
Books that influenced the Golden Butterfly philosophy
Buying a book educates you, supports the author, and earns Portfolio Charts a commission.
REDUCING THE RISK OF BLACK SWANS: Using the Science of Investing to Capture Returns with Less Volatility
Insights that mention the Golden Butterfly
Portfolios with a similar structure or design intent
Permanent Portfolio — The same fundamental portfolio without small cap value
All Seasons Portfolio — A similar investing philosophy built around economic risk parity
Pinwheel Portfolio — Another original idea designed for portfolio consistency
Change the home country to translate the portfolio to local assets, currency, and inflation.