All Weather Portfolio
You might be reading this blog in a bull market, a bear market, or a sideways market. Who knows?
The point is that you need to have your investments set up to stand the test of time. An “All Weather” portfolio.
Life isn’t about waiting for the storm to pass; it’s about learning to dance in the rain.
It’s about removing the fear in this area of your life so you can focus on what matters most.
WHEN, WHERE, AND HOW?
So, what does the All Weather portfolio look like? “ Where do you put your money? ”
First, you don’t have to waste your time trying to pick stocks yourself or pick the best mutual fund. A portfolio of low-cost index funds is the best approach for a percentage of your investments because we don’t know what stocks will be “best” going forward. And how cool to know that by “passively” owning the market, you are beating 96% of the world’s “expert” mutual fund managers and nearly as many hedge fund managers.
It’s time to free yourself from the burden of trying to pick the winner of the race. As Jack Bogle said, in investing it feels counterintuitive.
The secret: “Don’t do something, just stand there!” And by becoming the market and not trying to beat it, you are on the side of progress, growth, and expansion. So far we have referred many times to “the market” or the S&P 500. But remember that the S&P 500 is only one of many indexes or markets. Most have heard of the Dow Jones Industrial Average.
There are others, such as a commodities index, a real estate index, a short-term bond index, a long-term bond index, a gold index, and so on.
How much of each to buy is critical and something we will get to in Asset Allocation.
In fact, how would you like to have Ray Dalio tell you what his ideal allocation would be? The strategy he shares has produced just under 10% annually and made money more than 85% of the time in the last 30 years (between 1984 and 2013)!
In fact, when the market was down 37% in 2008, his portfolio model was down only 3.93%! Or how about David Swensen, the man who took Yale’s endowment from $1 billion to more than $23.9 billion while averaging 14% annually?
He too shared his ideal asset allocation. Priceless information all captured in Asset Allocation, “Invest Like the .001%: The Billionaire’s Playbook.” So if you look at these experts’ models without fully understanding asset allocation, it’s like building a house on a weak foundation.
Or if you focus on asset allocation before knowing your goals, it will be a complete waste of time. And maybe most importantly, if we don’t protect you from the people looking to take a good chunk of your wealth, all is lost.
That’s why we are uncovering the Myths—so that you become an “insider.” So that you will know the truth. And the truth will set you free.