How do you diversify your money? Legit question - I’m all cash rn
So I recently started working and collected around ~100k that is honestly just sitting in my bank account. I’m not invested at all and am ignorant on where I should put my money. I’m 2 years out of school so I don’t want a super conservative portfolio but also wouldn’t put a bunch of money in crypto and call it a strategy.
Anyone have a portfolio mix or diversification strategy they can share?
Based on the most helpful WSO content, here are some insights on portfolio diversification strategies:
Dalio's All Weather Portfolio:
Personal Investing: 3-Fund Portfolio:
Real Estate Diversification:
Risk Management and Diversification:
Accidental Portfolio Manager's Strategy:
These strategies provide a mix of conservative and aggressive approaches, allowing you to diversify your investments effectively.
Sources: How do you handle a negative streak?, Personal Investing: 4 Reasons Why 3 Funds Are All You Need, Dalio's all weather Portfolio - Value Investing version, Accidental portfolio manager looking for options, Qualities of a Great Investor
Bump
Plain old 60/40 works for a reason. There’s a lot of literature on why 60/40 works so well on a risk adjusted basis. Only flaw is that it tanks during stagflationary periods (low growth high inflation, bad for equities due to low growth and bad for bonds due to fed raising rates in respond to inflation). But 60/40 is a pretty well balanced portfolio that is moderately aggressive during boom markets (high equity growth). During recessions, the fall in equities are offset by bond prices jumping when fed drop rates quickly (convexity offers terrific asymmetry to bond returns when interest rates experience large movements, which occurs especially during a recession). Finally, equity and bonds generally have low correlations with each other, offering terrific diversification benefits (see Markowitz’s paper on Mean Variance Optimization on how the diversification math works out), lowering the portfolio risk in a way that results in a good risk adjusted return long run. Either that or just go 100% invested in the S&P 500.
If you truly have 100k liquid you could probably go to a small wealth management shop. Even some of the larger ones will waive the minimum just given your age. If you aren’t already though you should have that in a HYSA or at least start to ladder some bonds. Wealthfront is what I use and it’s pretty easy. I’ll pm you if you’d want to use my referral and it’ll boost the APY to 5.50%
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