Index investing works because it removes emotion from the process with systematic rules. The Risk Spectrum Constructor applies the same discipline to income allocation — tier weights, rebalancing triggers, and no discretionary guessing.
Investors who chose holdings by yield and conviction consistently underperformed systematic tier-weight allocations in backtests. The system beats the gut.
Knowing what to buy is step one. Knowing when to rebalance, when to reassign a tier, and what triggers a review is what makes a portfolio durable.
Tier allocation is the income investor's factor exposure decision. Systematic tier weighting produces more consistent outcomes than conviction-based overweighting.
Chapters marked Most Relevant are specifically applicable to your situation.
Why systematic tier-based construction outperforms intuition-based picking.
SGOV, BIL, T-bills — the foundation every income portfolio needs.
SCHD, VIG, DGRO — dividend growth with capital stability.
REITs, BDCs, MLPs — higher yield with understood structural risks.
JEPI, JEPQ, SPYI — covered call income at managed volatility.
Single-stock synthetics — position sizing rules and total return reality.
Conservative (Tier 1-2), Balanced (Tier 1-3), Income (Tier 2-4), Aggressive (Tier 2-5), FIRE Bridge (Tier 3-4).
When to rebalance, what triggers a tier reassignment, quarterly review cadence.
Factor discipline > conviction
The Risk Spectrum approach applies the same factor-based discipline Bogleheads use for equities — tier weights instead of market weights, coverage ratios instead of P/E.
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