The Pinwheel Portfolio by Tyler provides broad asset diversification that builds upon the four traditional asset classes with performance-enhancing tilts.
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Asset Allocation
How to build a Pinwheel Portfolio
Author
Tyler
I’m a mechanical engineer, investing researcher, spreadsheet aficionado, and the author of Portfolio Charts. The Pinwheel Portfolio is a portfolio idea born of my ongoing exploration.
Overview
Browse enough portfolios and you’ll start to notice a pattern where a large number of financial professionals all recommend the same common assets — domestic stocks, international stocks, intermediate bonds, and real estate. The Pinwheel Portfolio adopts each of those four assets in equal weights, and adds one complementary asset of each type to boost returns and minimize risk.
- Domestic Stocks > Small Cap Value
- International Stocks > Emerging Markets
- Intermediate Bonds > Cash
- Real Estate > Gold
The end result is a uniquely balanced portfolio with an intelligently modern twist on a traditional 4-asset foundation. Featuring high returns and healthy withdrawal rates, it’s a good portfolio choice for both accumulators and retirees. And it’s also an easy evolution for many investors looking to add new assets to the ones they already own.
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Performance
Since 1970, an investor in the United States holding the Pinwheel Portfolio earned an average 6.6% real return, with a baseline CAGR of 5.1% over 15 years. It supported a 5.6% safe withdrawal rate for 30 years and 4.6% indefinitely. Its worst peak-to-trough loss was 24%, and the longest a new investment spent below water was under 6 years.
Pinwheel Portfolio Performance
| # | Metric | What it measures |
|---|---|---|
| 6.6% | Average return | Mean annual return after inflation |
| 5.1% | Baseline real return (15 years) | What 15-year stretches returned in the weaker outcomes |
| 5.6% | Safe withdrawal rate (30 years) | Highest spending rate that lasted 30 years in the worst case |
| 4.6% | Long-term withdrawal rate | The SWR floor over very long retirements |
| 24% | Deepest drawdown | Worst peak-to-trough loss after inflation |
| 6 years | Longest drawdown | Longest a new investment stayed below what you put in |
| 10.7% | Volatility (standard deviation) | Year-to-year variation in returns |
Charts
Different ways to visualize the Pinwheel Portfolio
Comparisons
How the Pinwheel Portfolio compares to other options
Alternatives
Portfolios with a similar structure or design intent
Core-4 Portfolio — The same four primary assets in different percentages
Swensen Portfolio — Similar portfolio structure with fewer assets to manage
Golden Butterfly — Another original idea designed for portfolio consistency
Articles
Insights that mention the Pinwheel Portfolio
Discussion
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