You can do so by either investing across the various asset classes, across sectors and industries or across the globe. What does it mean? All this means is you’re not putting all your eggs in one basket. “Diversification reduces your risk without reducing your return… a tremendous thing in improving your return-to-risk ratio.” - Ray Dalioĭiversification is a key part of an efficient portfolio. I’ve personally used some of these principles to make £100k in passive income in my 20s - with no capital other than what I was earning from my day job. You can now use these insights as a basis to build and grow your own financial future by learning directly from one of the best in the world - the “Da Vinci of investing,” as the financial press dubbed him. And see if the results are comparable, no matter the economic climate. This is what investors call “back-testing” - you take the same set of assumptions and apply them to a different economic situation that occurred in the past. This is because he has tested his bets by running his portfolio composition through different times of History.īy simulating how his portfolio would fare in the Great Recession and other unstable times, he was able to extract enduring principles which underpinned all his investment decisions. You can see the detailed composition of this portfolio here.ĭalio utilizes what he calls “timeless and universal” investment principles. How? You may have heard of Ray Dalio, the legendary investor and founder of one of the world’s largest hedge-funds.ĭalio spent 25 years of his life refining his investment strategies that could weather any storm. The good news? You can at least build your portfolio to mitigate their impacts on your earnings. The bad news? You can’t control any of those fluctuations. Or a gigantic wave, coming crashing down on the shore every so often. Going up and down at a pace, like an unstoppable rollercoaster. This is because economic times are rarely ever stable and tend to operate in cycles. Without paying attention to where you invest your money, your investments may suffer over time.
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