Shared: The best investment strategy for you? It’s the one you’re likely to stick with. – The Washington Post

The best investment strategy for you? It’s the one you’re likely to stick with. – The Washington Post:

We don’t know what the future holds, but we can make some reasonable assertions based on long-term historical data. We know that holding non-correlated asset classes provides diversification benefits, one of the few free lunches on Wall Street. Large-cap and small-cap stocks in the United States, equities of emerging markets and developed nations, Real Estate Investment Trusts, Corporate Bonds, Treasury Inflation Protection Bonds, High Yield Bonds and, of course, old-fashioned Treasuries. We hold these in a proportion that matches your risk tolerances — more equities for those with a reasonable appetite for growth, less for those who are less comfortable with volatility. Assuming no major life event changes and your risk tolerance (notice the direction of the market should not determine your true risk tolerance), rebalance once or so a year in order to not stray too far from your original allocation.