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(read 5% swing at portfolio wide or with 3% of SPY)

Not sure what this means. What is "5% swing at portfolio wide"? Are you saying 5% max drawdown? You can't take hardly any risk at that level.

Roughly speaking, I would think you could shoot for 8-12% returns if you are willing to tolerate a 30% drawdown.

Really though...the question is the wrong question to begin with. There is an old maxim "manage the downside risk, and let the returns take care of themselves". In my experience, people get into trouble when they start thinking in terms of certain returns to target. I think it is more useful to think in terms of what is the maximum tolerable downside drawdown I can tolerate.
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