💰RAY DALIO ALL WEATHER PORTFOLIO 💰 TONY ROBBINS BEST INVESTMENT

After reading Tony Robbins Money Master The Game I wanted to go into more detail about what I consider to be his best part of the book, Ray Dalio's 'All Weather Portfolio' asset allocation, i think it's an incredibly powerful took and so I wanted to go over it in more detail.

The All Weather Portfolio:

First, Ray said, we need 30% in Stocks (for instance, the S&P 500 or other indexes for further diversification in this basket). Initially that sounded low to me but remember, stocks are three times more risky than bonds. And who am I to second guess the Yoda of asset allocation!?

“Then you need long-term government bonds. 15% in intermediate term (7- to 10-year Treasuries) and 40% in long-term bonds [20- to 25-year Treasuries].”

“Why such a large percentage?” I asked.

“Because this counters the volatility of the stocks.” I quickly remembered it’s about balancing risk, not the dollar amounts. And by going out to longer-term (duration) bonds this allocation will bring a potential for higher returns.

He rounded out the portfolio with 7.5% in gold and 7.5% in commodities. “You need to have a piece of that portfolio that will do well with accelerated inflation so you would want a percentage in gold and commodities. These have high volatility. Because there are environments where rapid inflation can hurt both stocks and bonds.”

Lastly, the portfolio must be regularly rebalanced. Meaning, when one segment does well, you must sell a portion and reallocate back to the original allocation. This should be done at least annually and if done properly, can actually increase the tax efficiency. This is part of the reason why I recommend having a fiduciary implement and manage this crucial ongoing process.

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