The Perfect Portfolio, How I Would Allocate $20,000,000.00 to Realistically Maximize Gains Over The Long Term

No matter what age you are, I think that I have found the perfect portfolio with regards to portfolio Beta, Standard Deviation, Variance, Volatility, and the like. I call it the perfect portfolio because it combines a mix of global index funds, United States Index funds, Small Cap and Large Cap stocks, Value and growth stocks, Treasury Bonds and Cash, and even Dividend and no Dividend index fund investments in order to maximize the behavioral effects of not touching your investments for very long periods of time. The one main thing that you’ll have to decide for yourself, is how much risk tolerance you have, and of how much self control you have over your portfolio. If it’s low, and you are an inexperienced, neurotic investor, then you will likely need to allocate a decent portion of your portfolio towards ETF index funds that pay dividends, so that you’re income needs are satisfied, and so that you never feel the need to touch your portfolio, if you’re more experienced or less neurotic, then you should be able to take a little more risk here and choose index fund investments that do not pay dividends, reinvesting all of it into your funds instead, and minimizing your tax implications. For more information, be sure to subscribe to our blog for additional details and information, and to comment down below with your thoughts and opinions on the article, and we’ll get back to you within one business day with a response.

The main investments within the portfolio, as well as how they would be allocated, include the following:

The Perfect Portfolio for $20,000,000.00 in Non-Home Assets

So, the way that I would personally allocate $20M in assets, and how I think that everyone should allocate these, include the following (I lied in the title, this will include your primary residence):

$400,000 = Condominium – Purely in forms of the financial reasons for doing so, buying a home at any age is a really stupid investment. Get a high rise condo somewhere in Florida and pay way less in property taxes, maintenance expenses, etc. etc. You will make so much more money and will save so much more time over the long haul.

The Perfect Portfolios$600,000 = 10 Year US Treasury Note – $12,000 per year – Use the interest from the coupons here in order to help fund your lifestyle, but NEVER touch the principle. This $600,000 is your fall back safe guard in the case that you do something really STUPID and blow all of your money. This way you’ll at least still have your $600,000 US Treasury Note that you can fall back on, so that you can at least rebuild something of a life for yourself if the worst of this happens. Yes you have enough money with a $20,000,000.00 net worth that you can literally lose ALL of your money and still have $600,000 left.

Cars = $50,000 – Yes you read that right, only $50,000 on cars that you own, anything beyond this is a STUPID investment over the long run. This is assuming a husband and wife are each driving a 2020 Toyota Camry or Honda Accord, both of which are used. This will minimize your initial investment on the cars, and will lower your overall risk, fees and insurance cars since you won’t be driving a flashy sports car….ever 🙂

Cash – $750,000 – This is essentially your regular emergency fund and cash pile you use for your day to day life. Assume a 0.5% rate of return on this (once interest rates get back to normal in like 10 years) which would give you about – $3750 per year in income

CD Ladder – $200,000 – Assume a 2% rate of return here, for annual income of $4,000 per year

SPY, An S and P 500 Index Fund That Pays a 2% annual dividend – $6,000,000 – Income is $120,000 per year With a portfolio of this size, you’ve essentially already made it, and so it is stupid to not stay almost entirely diversified with your main equity holdings.

$3,000,000.00 – S and P 500 Vanguard Index Fund With No Dividend – This will keep your diversification, and will minimize your long term tax implications by not taxing you on a dividend, and by instead taxing you on that money.

$9,000,000.00 Remaining from Here

$2,000,000 in a Global Index Fund ETF That pays a 1% Annual Dividend – $20,000 per year – A global index fund is absolutely essentially for a portfolio of this size, as it minimizes you to US exposure. Again you don’t want to be taking huge equity bets with a portfolio of this size, especially since if you just purchase the Total World Stock Market, like a global index fund will do for you, you’ll easily have $100,000,000.00 to leave behind for your family when you’re on your death bed.

$2,000,000.00 in a Global Index Fund from Vanguard, no dividend, 6 basis points in fees

$1,000,000.00 in a Small Cap Value Index Fund – Again at this level of capital, you can afford to take some risks, and Small Cap Value Index Funds have historically outperformed the market by as much as 3 to 4% per year since the stock market began.

$2,000,000 SPY – Again use the dividend here to fund your lifestyle, might as well bump up the dividend income a little bit since this will make sure that you NEVER pull your money out of the stock market. – $20,000 per year

Here’s where it gets fun, as you have $2,000,000 remaining to satisfy your gambler’s niche, and to bet on any BLUE CHIP stocks or Index funds that you’d like, here’s what I would wholly recommend.

On the last $2,000,000.00

$500,000 on a Russell 2000 Index Fund ETF>>Take the Dividend of 1% for an extra $5,000 per year in income – You get risk and diversification off of this.

AAPL – $200,000>>$2000 per year

Google – $100,000.00

Phillip Morris – $200,000>>>>$10,000 per year in dividends

Amazon – $100,000

XOM – $100,000 >>>$6,000 per year

UBS – $100,000>>>$4,000 per year

Gold ETF – $300,000>>>$3,000 per year – Once again a great inflation and recession hedge to have in your portfolio. 

Walmart – $400,000>>>>>$8000 per year – this is a great inflation hedge and is a great defensive stock in the case that we get hit with a recession, it will help to recession-proof your portfolio a little bit.

By the way, this gives you $212,750 per year to live off of, which since you should be able to get qualified dividends on all of these securities, would give the perfect portfolio something like a 15% total marginal capital gains rate on this portfolio amount. Giving you $183,000 in after tax income per year to live off of. Add that to your social security checks you’ll be getting when you turn age 62 and you’ll have a cool $225,000 per year in after tax income to live off of and invest. I would recommend living off of something like $100,000 per year at this level, and investing the other $125,000 back into the S and P 500, Global Index Funds, or your blue chip stocks, you can play the growth game, or the dividend reinvestment game, and you still come out way ahead with this type of a portfolio. If you have this level of wealth at age 55, and you hold this portfolio allocation, then you will most definitely come out ahead with something like $100,000,000.00 when you are around the age of 90.

Final Thoughts on the Perfect Portfolio, And Why I Think This is It Right Here

And so, to wrap up this blog post, with $20,000,000.00, you can really grow your portfolio in something like a 10 to 30 year remaining life span to $100,000,000.00 at your final hour, which is one heck of a thing to leave behind to your loved ones. And on the off chance that you actually can take your money with you when you die (we don’t typically discuss religion on this blog but I figure what the heck) you’ll at least have some tokens that you can spread around in whatever happens in the after life, nuff said. I would definitely highly recommend allocating your investments to the above portfolio, and will see you in the $100,000,000.00 club if you do.

 

Cheers!

 

*Inflation Hedging.com

Sources:

https://www.bankrate.com/banking/cds/cd-rates/

https://money.cnn.com/data/markets/

 

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