This week’s video explains the logic behind building a portfolio. We discuss asset allocation, rebalancing, and how to use a portfolio visualizer tool to backtest the performance of various portfolio designs..

Notes

How do I build a passive portfolio?

• Decide which assets you want exposure to.
  1. Stocks, Bonds, Gold, Real Estate, Cash
• Decide your asset allocation (what % do you place into each bucket)?
  1. Based on return objectives (aggressive vs. conservative)
  1. Risk tolerance (aggressive vs. conservative)
  1. 60% stocks, 10% real estate, 10% gold, 10% cash, 10% bonds
• Use Portfolio visualizer to backtest portfolio metrics.
  1. Identify what ticker symbol represents each category
     1. 60% stocks: 40% SPY, 10% IWM, 10% EFA
     1. 10% real estate:
     1. 10% gold: GLD
     1. 10% bonds: AGG
     2. 10% cash

Rebalance: Selling a little bit of what went up and buying a little bit of what went down. Again and again and again. Buy low & sell high

Resources:

https://www.ishares.com/us/resources/tools/core-builder#/

https://www.portfoliovisualizer.com/backtest-portfolio

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