Welcome Nick, Re: "PRM" - Perpetual Retirement Machine.............
The plan you've laid out looks solid as an outline. The 70/30 ratio between equities and, I assume, fixed income will be the floating part of the operation. Over the years when we've had stellar equity returns, I've shifted some asset value over toward the income side. That helps the income stream keep pace with inflation.
In your case, when the Equity side would reach 75% or higher, maybe shift 5% over to the income side to keep that general balance and improve the income stream. I wouldn't do it as a strict re-balance protocol but would let the markets guide you as it would be better to shift value when the recipient was out of favor. It could be done from the CASH side of your equities to limit further selling and any tax consequences for capital gain. You should have already realized cap gains in building the cash reserve. If cash is already bloated, a shift toward income might well be justified.
I monitor my results for equities and income separately. Last year, for instance, the income side had a tough time early on and throughout the year. The equity side did much better until the year's end. AIM did buying in both segments but mostly at different times. Near year's end as the equity side sagged, the income side was recovering.
As part of my income strategy I use real estate investment trusts. These tend to move with inflation while adding nicely to income. That is something that government paper doesn't accomplish. I use corporate debt , preferred stocks, REITs and Government paper in the income portfolio. Over the last few decades the REITs have done the best followed by corporate paper with govt paper maintaining a steady but flat trajectory. Currently most of the income components are at or above their 200 day moving averages. That isn't true of the Equities side.
While Equities are rebounding nicely off their lows in December, most are at or below their 200 day moving average price. The various groups of equity holdings (U.S. domestic and International) are still below their 2018 peaks, but recovery is coming quickly with the improved Equity/Cash ratios from December's buying.
Adjusting Portfolio Control for withdrawals and inflation sounds like a good idea but I've never tested such. In recent years for income generating holdings that I'm not tapping for living expenses I have been moving the PC upward by the annual percentage yield. So many of my income components had been dormant on the Buy side that cash had swelled well beyond logical needs. This has helped encourage buying as interest rates have been rising and helped inhibit selling (where I really don't need further excess cash).
I'll ponder your situation and if I come up with any great ideas, I'll make sure to post them. In the mean time I hope the PRM is shaping up for you.
Buy from the Scared; Sell to the Greedy.....
