Asset Allocation of Your Investments

As you start to build some wealth, you’re presented with a new set of challenges. You’d ideally want your money to work for you and make money in return and you’d at the very least like to preserve your wealth with respect to purchasing power i-e fighting inflation.

Asset allocation is a strange topic for me because I’ve received all sorts of advice here. The advice, however, varied the most depending on the wealth of the person giving the advice.

As a general rule, the richer you are, the more conservative you’re with your allocation. Really wealthy people put a large amount of money at work, for low-risk returns, generating a decent chunk of cash. While up and coming investors and younger folks are aggressive and put a large portion of their wealth to generate high-risk above average returns.

I’m not going to give specific wealth advice, but personally I design my allocation such that 10% of my investments can make up to a maximum of 90% of my returns and 90% of my investments can potentially make 10% of the returns for me.

It is also why I really like crypto class of assets and I think every person should experiment with 5-10% of their wealth for trying to achieve really parabolic results. While the rest of the wealth should be allocated in safer assets such as equities, bonds, real-estate etc.

For equities, I like to build lazy portfolios with 70% sub-allocation for US indexes, 20% for other developed-world indexes, and 10% for the emerging economies.

And like everyone else, a major chunk has to get into real-estate which is not only safe in the most cases, but helps with both capital gains and recurring income.