Hi, Kathie

I'm sure you know the risks of accepting advice on here.  However, you seem to be someone with a good head on your shoulders (your view on DVY, which I share, is a good example IMO ;-) and you feel (justifiably) you have a relatively a good plan and are merely looking for a second opinion.

It sounds to me, given the limited information I have, that you are in pretty good shape.  Perhaps I can share what we did.  I retired five years ago.  Like you I have an inflation-indexed pension.  It provides somewhat less than half of our annual income, with the rest coming from investments (when we both start drawing Social Security in a few years, the total from inflation indexed income will be close to 2/3).  BTW, I am assuming your inflation adjusted pension is either with the US or a state government rather than a private company which, regardless of how safe it might appear now, might not be over the long run.

Like you, I have been relatively equity heavy.  I have overweighted small and mid cap over large cap, value over growth, and international over US only.  That worked like gangbusters from 2000 to through 2007, though admittedly not so well so far this year. I plan to stick with these slight biases.

For over a decade, I have put 10% of our portfolio into gold or precious metals funds, and 10% into the longest term US Treasuries I could come up with.  The simplest way to do this now would probably be with the GDX and TLT ETF's respectively.  Vanguard Precious Metals (VGPMX) - if they ever reopen it and which I own - and Vanguard US Treasury Long Term (VUSTX), which I also own, would be acceptable alterntives.  Those have worked out for us better over the last decade than they are likely to going forward, admittedly, but I figure that those will continue to give us small positions in asset classes that will react with relatively high volatility to conditions unfavorable to stocks - either a high inflation or deflation/depression environment.  That allows us to be heavier into equities than we might be otherwise, and thus give us a better long-term rate of return while still dampening volatility.  Just something to consider.

As far as individual stocks go, I am mostly avoiding those now.  I prefer funds or ETF's because I would feel uncomfortable with individual stocks in my permanent portfolio - too much homework needed.  Again that is just my personal preference.

Finally, I recommend you determine whether you desire to have a "variable" portfolio or not.  You already have a "permanent" portfolio.   That is your overall investment portfolio, designed to supplement your income from your pension.  This should be something you invest based on a very long term outlook using asset allocation.  A variable portfolio, OTOH, if should you choose to have one, is where you would pick individual stocks hoping for a large gain, or bet on when you think financials might start to recover, or take a big position in a particular emerging country fund, or anything else where you are trying to "outguess" the markets.  Many investors get those two confused IMO.  I have a very small variable portfolio (which is currently about 80% in gold shares and 20% in cash - and considering those financials with the cash BTW); however, this is only a small portion of our net worth and is funded entirely with money we could do without if I screw up and lose a big chunk of it (unlikely, I hope, but certainly not beyond the realm of possibility ;-)

These are just ideas.  As I said, you seem to be on the right track.  Regards.

MWL