We have been living off our portfolio for over 8 years now, since late 2012.

For the 1st 6 years I made only minor adjustments – annual rebalancing, minimizing long-term taxes with capital gain harvests and Roth conversions, and adding the occasional small chunk of fresh capital as blog income allowed.

But after ~7 years of the stock market trending upward and the conscious decision to spend more, in early 2019 we took some money off the table (sold stocks / bought bonds.) When literally everything went to hell due to COVID-19, we sold most of those bonds to buy stock and increase our cash cushion.

Now, this is what our portfolio looks like in 2021.

GCC Asset Allocation

As of early April 2021, according to Personal Capital our portfolio looks like this:


This looks very similar to our asset allocation from one year ago, just with a substantially higher valuation.

Assets and allocation

Our portfolio continues to be heavily weighted towards equities. Here is the breakdown:

US Stocks:  65% -> ~71% VTI, plus 21% S&P500 and ~7% Small-cap trusts in my old 401k
International Stocks: 18% -> ~93% VXUS, 7% VWO, and small holdings of Vanguard MFs in our HSA
Bonds: 8.5% -> ~75% Municipal bonds (mostly MUB, some VTEB), 10% intermediate term Treasuries (IEI), 15% I-bonds (not shown in the chart, about 1.5% of total)
Alternatives: 3% -> 100% VNQ (a REIT) and REIT holdings as part of VTI
Cash: ~5.5%

Some interesting ratios:
Stock / Bonds-Cash: ~ 87 / 13 (trending away from 100% equities)
US / International equities: ~ 80 / 20
Taxable / Pre / Post-tax: ~ 68 / 24 / 8 (Roth is trending up – was 0% 8 years ago)

Data from previous years: 201620182019, 2020.

Ch-ch-ch-ch-Changes

Each year when I write these asset allocation reviews I try to highlight any updates or changes over prior years.

This year there is nothing to highlight – the portfolio holdings are exactly the same as they were a year ago.

But just looking at allocation percentages fails to convey the extent of how our portfolio has changed over time even with asset allocation remaining constant.

As such, here are 2 charts showing asset allocation over the last 9 years. In the first chart it is easy to spot a 10% shift in stock/bond ratio starting 2 years ago. This was a change we made due to just being older and less interested in enjoying market volatility.

Does a 10% shift have any real long-term impact? Maybe, but probably not.


This second chart shows the same information but with total portfolio value as the y-axis.

The most interesting thing here is that we now own more US stock than our entire portfolio was worth when we started living off of it. It’s also clear just how much more bonds and cash we have.

Tax Optimization

Another important factor that is left out when looking solely at asset allocation is taxes.

If our effective tax burden is greater than zero, then it is better to have more funds in Roth IRAs and to have a higher basis in taxable accounts. This is accomplished via Roth conversions and Capital Gain Harvesting.

When the market was way down in March/April 2020 I converted ~$17k from Traditional to Roth. I also front-loaded IRA contributions. In December when the market was back to all-time highs, I harvested ~$50k of long-term capital gains. This was all done with zero tax.

Overall we are approaching 10% of our portfolio being in Roth accounts and our basis is >$300k higher in taxable accounts. Details here.

This will save maybe $100k+ in future taxes, so seems worth doing. For a step-by-step example of what harvesting a capital gain looks like, I’ve written a template based on the trades I executed in December 2016. Drop your email address in here and I’ll email it to you.

Portfolio Expense Ratio

Through absolutely zero effort on our part, the total cost of managing our portfolio continues to fall, dropping from 0.08% 8 years ago, to 0.06% 5 years ago to <0.05% 2 years ago… and now to 0.03%. On $1 million, a 0.01% drop is a savings of $100+ per year.

Some of this is because my old work 401k continues to negotiate lower prices on the asset trusts they use, and part is from Vanguard continuing to drop expense ratios. I’m looking forward to the days when they start to formally pay us instead. This does happen now in practice as ETF managers lend shares to short sellers, but I would like to see a more formal contractually obligated payment to shareholders via a negative expense ratio.

Retirement Account Fee Analyzer by Personal Capital

Plus, now that many of the big brokerages charge zero trading fees, we also no longer pay $20-$50/year for cap gain harvesting and portfolio rebalancing.

Reward Points

While not a traditional asset class, we have continued to build a healthy amount of airline, hotel, and travel rewards points through credit card signup bonuses. Despite cashing out a ton of points last year our point hoard (and credit score) continues to be worth a healthy chunk of change.

One example of point usage: $16,000 business class flights to Europe for $300.

Alaska Airlines: 161,700 miles
Amex: 0
Capital One: 0
Delta Airlines: 9,281
Hilton: 27,051
IHG: 180,916
Marriott/SPG: 191,567
Ultimate Rewards: 3,750
United Airlines: 47,429
Total value: $6,304+

Not included in the above – 2 free night certificates with IHG and 3 with Marriott (5 nights total) and $750 credit on United for a covid-related flight postponement.

Free night certificates with the Marriott Bonvoy Boundless credit card are a sweet deal.

My hope is we can use a bunch of these free nights for a ski trip in Japan in January 2022 (but probably not.) Otherwise, our next potential travel is to the US in summer 2022.

For ideas on how to accumulate or redeem award points, check out our Award Travel Series!

Final Thoughts

We’ve been living off the portfolio for over 8 years now. It’s been a pretty good ride.

A couple years ago we shifted about 10% of our portfolio from stocks to bonds because we are older people with kids who are less interested in enjoying high volatility. That is still the allocation we have today.

I was able to slip some money into stocks during the covid plunge, but not as much as I would have liked. I was hoping the market would stay down longer, but since when has the market cooperated for anybody but long term buy and hold investors?

But overall things are good – portfolio is up, Roth percentage is up, basis is up, quality of life is up. Can’t complain.