Working in Finance and having a general interest in investing I love keeping abreast with the capital markets and economic news. Through self-education, I have learnt the importance of taking control of my own financial situation and being proactive with my finances. Neglect could lead to repercussions.
Anthony Robbins, a motivational speaker and in my opinion one of most empowering human beings in modern time, released a book called Money – Master the Game: 7 Simple Steps to Financial Freedom, which set out to reveal some of the secret sauces that today’s great financial minds created in order to deploy capital effectively. One of those great minds was Ray Dalio, founder of Bridgewater Associates, an investment management firm that has performed tremendously well navigating the financial markets since founded by Ray Dalio in 1975.
One of the key takeaways from the book is the asset allocation of Ray Dalio’s ‘All-Weather’ portfolio, which provided a robust 9.7% annual return for a period of 30 years (1984- 2013). Not only is this a good return, according to Robbins’ book, the portfolio has low volatility and loss rates.
So, courtesy of Mr. Robbins and Ray Dalio, here is the basic asset allocation of the ‘All-Weather’ portfolio:
- Long-term Bonds 40%
- Stocks 30%
- Intermediate-term Bonds 15%
- Gold 7.5%
- Commodites 7.5%
This portfolio is not simply laid out to “set and forget,” it will require regular re-balancing depending on the economic landscape (growth vs. inflation/deflation). You can see from the below “ultimate asset allocation” table the various asset classes that fit into the basic asset allocation shown above.