The best (and simplest) way to avoid financial disaster
by Ben Morris
Source: Daily Wealth Trader
http://thecrux.com/the-best-and-simples ... -disaster/
The blend developed by our Chief Investment Strategist Alexander Green is as follows...
30% U.S. stocks
30% foreign stocks
10% high-grade corporate bonds
10% high-yield bonds
10% inflation-adjusted Treasurys
5% real estate investment trusts
5% precious metals.
Of course, there are lots of factors to consider when determining your own ideal mix - age, appetite for risk, income needs, etc. But what’s important is that you spread your risk across multiple assets and asset classes.
Here is the model portfolio I’ve recommended in my new book The Committee to Destroy the World:
Gold, precious metals, tangible assets-10-20 percent
Cash-10-20 percent
Absolute return strategies-20-40 percent
Dividend paying equities-20 percent
Income generating securities-10-20 percent
Stocks historically outperform bonds in the long run, and smaller stocks historically outperform larger stocks in the long run, although the latter difference is more negligible.
Given these trends, a growth-focused portfolio is content to survive economic turbulence if it means a higher probability of greater returns over time.
We hedge our bets with a simple “one-thirds” portfolio.
Broadly speaking, we put one-third of our money in cash, one-third in gold, and one-third in carefully selected stocks.
50-40-10 Model
The bottom layer – the 50 – is full of “foundational” investments chosen for their ability to withstand market volatility while giving you a rock solid base from which to pursue growth.
The middle layer – the 40 – are typically global companies with fortress like balance sheets, growing top and bottom line numbers making “must-have” products and services tapped into the Unstoppable Trends. Most typically have above average yields, too, making them a super choice for income oriented investors.
The top layer – the 10 – is the much higher risk stuff usually oriented around a specific catalyst that our research has uncovered. Examples include new patents, contracts, buyouts, spinoffs, etc.
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