Financial Freedom Series: The 10-20-70 Principle (Part 7)

Welcome back to our Financial Freedom Series, where we’re looking into God’s Blueprint for Building Wealth and Managing Your Money Well!

We dive into biblical principles and cutting-edge money management wisdom to help you…

• Honor God with your money
• Build wealth
• Shrink your debt
• And build toward financial freedom

“But remember the LORD your God, for it is he who gives you the ability to produce  wealth.” (Deuteronomy 8:18) 

“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5) 

“I will guide you along the best pathway for your life. I will advise you and watch over you.” (Psalm 32:8) 

“The wise man saves for the future, but the foolish man spends whatever he gets.”  (Proverbs 21:20) 

“The rich rules over the poor, and the borrower is the slave of the lender.” (Proverbs  22:7) 

“But blessed are those who trust in the Lord and have made the Lord their hope and confidence. They are like trees planted along a riverbank, with roots that reach deep into the water. Such trees are not bothered by the heat or worried by long months of drought. Their leaves stay green, and they never stop producing fruit.” (Jeremiah 17:7-8) 

“Hope deferred makes the heart sick, but a dream fulfilled is a tree of life.” (Proverbs 13:12) 

It is your time to dare to dream. 
It is time to reset your goals. 
It is time to rekindle your passion. 
It is time to aim high. 
It is time to attempt great things with God. 
It is time to live on purpose. 
It is time to reignite your vision. 
It is time to be fruitful. 
It is time to get positioned for God to 
catapult you into your destiny. 

Your best days are ahead of you.

The All-Weather Portfolio

Investing can be nerve-wracking at times. Markets can be extremely volatile. Pandemics, political upheaval, recessions, natural disasters, wars, and general supply and demand can have a huge impact on market cycles. Sometimes, one asset class or sector of the market may soar while another falls flat.

In any investment portfolio, it is important to ensure that your money is managed according to your specific needs and goals and that you stick to your long-term objectives.

The All-Weather investment philosophy aims to help you create a diversified investment portfolio that is insulated from extreme volatility and can perform well over the long term, regardless of the prevailing conditions. 

Today, we will look at a cautious approach to investing that can weather the storms and still give you the ability to generate real growth over time. It is called the ALL-WEATHER INVESTMENT PORTFOLIO approach to investing.

Many years ago, I read Tony Robbins’s book MONEY—Master the Game: 7 Simple Steps to Financial Freedom. In the book, Tony shares an interview with Ray Dalio about an investment strategy called THE ALL-WEATHER PORTFOLIO.

To give you some background, Ray Dalio founded Bridgewater Associates, one of the world’s most prominent hedge fund managers. He grew up in a working-class Italian American family, and as a young boy, he worked as a golf caddy, earning tips from his wealthier clientele. Ray started his investment career on the New York Stock Exchange floor. In 1975, he began his company, Bridgewater Associates. Over the years, Ray has been a successful and respected investor. 

By the way, I am reading Ray Dalio’s book Principles, which includes a treasure trove of principles he developed over his career that led to his success in business and investing.

In the book, Ray Dalio shares how he came up with the All-Weather Portfolio and how he aimed to manage his family’s personal wealth in a way that could withstand the storms. 

The All-Weather Portfolio’s aim is to limit losses and deliver real growth over time through any financial climate—be it a bull or bear market, a pandemic, or a recession.

The portfolio is a well-diversified, cautious-balanced investment portfolio and can be broken down as… 

• 55% in fixed-interest funds consisting of cash, short-term, and long-term bonds
• 30% equities (shares)
• 15% in a mix of gold and commodities

According to the “Iwillteachyoutoberich.com” blog, “Ray Dalio chose this long-term asset class mix based on his theory on economic seasons.”

According to Ray Dalio, four seasons affect the value of assets:

1. Inflation – the increase in prices for goods and services — and the drop in purchasing value of a currency
2. Deflation – the decrease in prices for goods and services
3. Rising economic growth – times when the economy flourishes and grows
4. Declining economic growth – times when the economy diminishes and shrinks

Based on these elements, Ray Dalio believes the economy can go through four seasons…

1. Seasons of higher-than-expected inflation (rising prices)
2. Seasons of lower-than-expected inflation (or deflation)
3. Seasons of higher-than-expected economic growth
4. Seasons of lower-than-expected economic growth

Ray Dalio constructed a portfolio to protect his family’s wealth. The portfolio consists of assets that performed well in each season. The result is a diversified portfolio that can consistently earn you money while keeping you financially secure during bear markets.

Today, I am not advocating that the All-Weather Portfolio is the perfect strategy for you. Everyone has unique needs and objectives. However, designing an investment portfolio that is defensive in times of uncertainty and can take advantage of opportunities to generate good growth during favorable seasons is a good concept to consider. 

The All-Weather Portfolio has good diversification and relatively low equity (shares) allocation. This helps reduce volatility and ensure a “defensive first” strategy to minimize risk. The gold and commodity exposure and share exposure allow the portfolio to generate promising growth when markets rise. The fixed interest component in the portfolio counters the volatility of the share allocation, and this, in turn, creates a well-balanced mix that can “weather” any season.

According to Tony Robbins’ book MONEY, The All-Weather Portfolio strategy has produced just under 10% p.a. in more than 85% of the time in the last 30 years.

You can build your All-Weather Portfolio using several active and passive unit trust funds. However, I suggest you get some advice on constructing your portfolio.

It is also important to rebalance your investment portfolio occasionally to maintain the right asset allocation mix. 

“Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” (Ecclesiastes 11:1-2) 

To add, the average low-equity Cautious Stable Unit Trust Fund also has a diversified asset spread consisting of around 30% global and 70% local assets with…

• Around 40% in equities and commodities
• Around 60% in fixed interest funds consisting of cash, short-term and long-term bonds

Cautious Stable Funds have a defensive first strategy that helps to insulate the portfolio from extreme volatility. These funds aim to generate real inflation-beating growth over the medium to longer term. 

“The wise are cautious and avoid danger; fools plunge ahead with reckless confidence.” (Proverbs 14:16)

Why not consider building a diversified ALL-WEATHER PORTFOLIO? 

I really want to encourage you: Please get advice.

Start building an All-Weather Wealth Portfolio that is protected from storms and allows you to grow your wealth over the long term.

If you start building your all-weather wealth portfolio, you can set yourself and your future family generation up for financial success.

“Train up a child in the way he should go; even when he is old he will not depart from it.” (Proverbs 22:6)

“The wise man saves for the future.” (Proverbs 21:20)

“Whoever gathers money little by little makes it grow.” (Proverbs 13:11)

“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” (Ecclesiastes 11:2)

“A good man leaves an inheritance to his children’s children.” (Proverbs 13:22)