Keeping it simple is usually a good principle in investing – and that’s definitely true when it comes to deciding what should make up the core of your portfolio. There are only a handful of established, transparent and proven asset classes that have distinctive properties.
Striking the right balance between them is the first decision in any investment strategy. Equities have historically been the best choice for growing your wealth: shares have outperformed bonds and cash in all major markets over the long run.
If you’re young and saving for a distant retirement, you might have almost all your portfolio in the stockmarket. But shares are volatile, so an older investor who wants their wealth to be more stable might choose to keep just half of their assets in shares.
Your property should mean far more than your house: it could include offices, shopping centres, factories or warehouses. History suggests commercial property returns will be lower than equities, but this asset brings steady income and useful diversification.
Most of us will invest in property through Reits, which make up 10%-20% of a balanced portfolio. Bonds have two main roles: as a steady source of income and as a safer asset that does well when shares swoon.
With yields as low as they are, the former now looks less compelling: investors may prefer to stick with equities for much of their income instead of switching entirely into bonds at retirement. But holding safe government bonds helps balance the volatility of stocks, so they could still make up around a quarter of a balanced portfolio even at today’s meagre yields.
Cash provides a buffer for unexpected expenses, but also means that you are well placed to take advantage of any buying opportunities the market throws up. But too much cash will be a major drag on your returns. An allocation of 5%-10% is sensible in most circumstances. Finally, there’s gold.
Some investors suggest holding commodities in general, but the yellow metal is the only one with a strong case for being a core holding. Gold pays no dividends or interest; in fact, it usually costs you a small amount in storage or management fees to own it.
But it’s a highly liquid and trusted asset that consistently does well during crises. Keeping 5%-10% of your money in gold is a simple way of insuring against a major meltdown
Motivational Quote Of The Day
“Once you say you’re going to settle for second, that’s what happens to you in life.”
J F Kennedy
Alternative Quote Of The Day
“One-armed butlers – they can take it but they can’t dish it out.”
Tim Vine
The Fruit Box
The Fruit Box is an Australian company that delivers fresh fruit to company break rooms as an alternative to the usual unhealthy stuff you find in such places.
Ten years ago, the company had two delivery vans. It has more than 50 vans and delivers 600,000 pieces of fruit each week.
Might this work in major cities in the UK? I can see no reason why not. Healthier eating is high on the agenda of a lot of office workers, but good quality fresh fruit isn’t always easy to source and transport when they’re on their way to work.
Something for an ambitious entrepreneur with huge upside potential.
Today’s National Day
NATIONAL I AM IN CONTROL DAY!
PUBLISHERS NOTICE
“No Gym, No Problem!”
Hello.
Now Gyms Have Been Closed Temporarily You Might Be Wondering…
What To Do Instead?
Well if you’re anything like me, the answer isn’t ‘nothing’!
Over a decade ago now we were introduced to an intriguing and unique home exercise programme. We decided to publish it in limited numbers and it created something of a sensation, with many of our customers saying it’s the most effective thing they’ve ever tried…
And It Takes Just 7 Minutes A Day!
This isn’t just a ‘make do’ programme because your gym is closed. It’s a programme which you can use for life, no matter where you are without special equipment, and achieve spectacular results.
You can find out all about it and hear from some of the people using it to transform their fitness and their appearance HERE.
These are difficult times, but it doesn’t mean we have to give in.
With this programme, I believe it’s possible for you to come out of this fitter and healthier than you went in.
Take a look CLICK HERE and see what you think.
Kind Regards
John Harrison
