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Ramen, one the reasons I love your videos and podcasts is because you are a calm voice of reason, backed with data, during a very noisy time. The only place we differ is I believe BTC is less risky than sovereign debt over the next 50 years. I think many asset managers are going to have a rude awakening as they realize our money is broken. Would love to hear a deep dive from your more skeptical view.
BTC over 50 years? It lost a third of its total value in 3 years, it's run for gangsters and operated by fraudsters and has no intrinsic value, 1% of the top holders have 90% of the value, it's a racket!?!
@@TomTomicMicyou are very misinformed and I would suggest learn why the largest asset managers in the world (BlackRock, Fidelity et al) are now adding BTC to their portfolios via their SEC approved ETFs 😉
Nice video. I'm 100% in stocks in my SIPP as I'm in my early-mid 30s so are unlikely to need the money for 20-35 years. In my S&S ISA I've moved most of my money into money markets, due to needing the money in the short term (renovating my home).
@@giri802 I don't know enough about them to be able to recommend one over another. To narrow your search, you could look at money market funds that are available to you, sort lowest charges to the top, and then find one with a large market cap. This isn't advice, and I don't know if this is a good idea, but I think it's a justifiable approach. Note, it could be recommended that you look for a money market fund that's in your local market (e.g. if you're in the UK then you want a UK money market fund).
I do follow a 3-portfolio framework for a few years now, but I got their weights a bit 'wrong' for this period , so I wish this video was out 5 years ago :-)
At the end of the day, the best portfolio is what Warren Buffet suggested 90% SNP500 and 10% short term treasuries (individual treasury ladders). When this portfolio reaches a point where 10% treasuries can cover 3-5 years of the living expenses, you are all set.
Having watched this five months on (March 2024) I would be interested to see an update on how things have performed and also to look back at performance of the three fund portfolio over 5, 10 and 15 years.
Exactly, it would be shockingly poor in comparison to a 100 equities Global Index fund. I cant see the point for the average, apart from a justification of IFA fees, all the average needs is a Global Index fund, done!
Thanks Ramin. Just an idea: you didn't mention rebalancing- to what extent does having more buckets/funds within a portfolio enhance returns through rebalancing opportunities? Part of the appeal of the standard stocks:bond portfolio (eg 60/40) is the rebalancing, which keeps the returns more respectable than some would expect. I would think that as long as each fund is mostly uncorrelated, there would be opportunities to buy lower and sell higher and benefit from the relative volatility. Assuming that's true, it would be interesting to see at what number of buckets the benefit of this starts to drop off. My guess would be around 4 or 5, based on the all-weather portfolio as I believe that rebalancing was an important part of that strategy.
I thought this was a fascinating video, firstly, nice to finally understand why stocks and bonds fell together. But it also got me thinking about why intuitively I have never been a fan of bond funds, as you end up over time with a mixture of the good, bad and the ugly. Single bonds seem clearer, as you know what you are getting, who cares about the NAV if you are holding to maturity anyway! That said, I do hold life strategy 80/20.🙃
Thank you Ramin for the hard work that you put into making these videos. When discussing less adventurous portfolios I think it would make sense to judge them against SWRs as these allocations usually make sense for retirees who want to protect against sequence of returns risk. When judging against SWR I think it's worth considering the two broad types of retirees, those with a bequest motive and those who want to spend it all before they die as the SWR and supporting allocations will be driven by these two scenarios. When modelling a legacy I think a 50% or at least 45% residual value is a sensible example, even for those who may be aiming at ideally 100% as it allows for the rare but possible crash at the moment of death which would be incredible expensive to insure against.
Could you make a video about pros/cons for ETFs based in Ireland vs. Luxembourg? How do withholding tax with more, impact the performance of the ETF? Thanks for all your great content😀
I'm currently 17% down on LS20. Been invested since 2021 and didn't even buy at the top of the market! Really expected to see some kind of improvement by now, will it be years and years before this recovers to where it was? Really wish I'd just invested in gov bonds directly!
There was a 2 page article in the investors chronicle in week 1 of september 2023 - 1-7sept "Portfolio clinic" Where a 70 year old chap who had sooo many investments in both their ISA and SIP, so many funds and then a lot of money in cash. They had 2 "professionals" offering advice. Clearly the chap should have consolidated his invests. Not add to it but they were recommending others as well as some minor changes. The reason i mention it, is i personally think it would make a great video if you took someones portfolio and explained what concerns / corrections you would make if it was your own.
In retirement a portfolio should be split into buckets 0-3 years 4- 10 years and 10 years plus. CSH2 is a great component for the 0-3 years. For 4-10 years a quality dividend ETF such as WisdomTree Global Quality Dividend Growth should have lower volatility than a simple global tracker. For 10 years plus a developed markets global tracker or the S&P Global 100 from L&G could work alongside some exposure to smallcap and emerging markets (when they are on sale)
Nice video, food for thought as always wanting to simplify my overly complex portofolios.. interested in examples of funds that match these criteria. Especially the "broad commodities", as its a pretty specialized sector and seems which often leads to actively managed funds
Good video. If your thesis is that equities could get crushed next year, perhaps the balance of your portfolio might be slightly different (especially when you can get 5% for holding cash for now). Depends how much you wish to manage your portfolio and time frame ofc.
Lots of talk now of higher for longer. Is it time to start moving from short duration to intermediate duration. I think now is too soon but the time will come next year where these will let investors lock in yields at 5% and also capital gain if rates are eased to drive economic growth
Gold has been a much better diversifier than bonds over the long term - when you really needed a diversifier to do its job. 10% in gold is a sensible idea for most people. Even 15-20% isn't a gross overallocation. The trouble with holding broad commodities is that they get cheaper over the long term, so aren't great as a long term hold. Gold, at least, still increases in purchasing power over the long term. I would not have more than a 2-3% sliver in general commodities unless you understand macro plays very well.
PDBC is good lower fees than most. You can also buy an oil fund and a gold fund. GLD. Or do a 5% bitcoin allocation for best returns and inflation hedge.
Great video. Broad commodities is the interesting one. It's a large allocation that worked well this time but I understand them less than bonds to be honest (pork bellies???). Need to study more!
@frederickwoof5785 Are you suggesting sell low and buy into another fund or funds that are up, doing well. Surely that goes against all the sensible investing advice. You really want to try and sell high, buy low. This is why the passive investing strategy can work so well if you stick to it, stay the course as John Bogle said. Market timing is a losing game. It's all about behavioral psychology, apparently humans aren't hardwired for investing. But passive investing strategies can help a lot with the behavioral problems. You just need to decide upon a sensible strategy based upon your goals, time frame, risk tolerance and financial position. Keep costs low and be well diversified across regions, sectors and asset classes and then stay the course no matter what. Also passive funds, etfs that track broad market indexes are very well diversified and usually low cost if you choose the right ones. It's not difficult, keep it simple. And if you have more than one fund just rebalance once a year
You should put in a four fund portfolio and go back to 2015. Add a 10% bitcoin allocation and it would make those other portfolios look like anthills even the 100% stock portfolio looks like an ant hill compared to a 10% bitcoin allocation with 90% cash/short bonds😊
@@michael2275 OK, but maybe single inflation-linked bonds? I was just surprised there was no mention of them at all, even if only to say "you might think that they're the answer but actually they're not necessarily".
I hope this question isnt a stupid one. When you speak of 2 or 3 fund portfolios, hopefully each fund will grow to be over the £85k government compensation limit. Is that something we should worry about?
Very useful, thanks Ramin. Some forcast a recession next year so would it be wise to hold money back & dca the money in every couple of months over a 12 month period?
You can be sure that Ray Dalio doesn't invest in the all weather portfolio- life most advisers they do something entirely different with their own money
Hi Ramin, thanks for your video. Is the 3-fund portfolio an all-weather portfolio or only suitable if one thinks that inflation will remain high as in 2022? In other words, do you rule out long duration bonds for an all-weather portfolio? Also, what do you think of having credit (whether it is IG or HY)? Howard Marks thinks that we should invest in credit in this higher for longer environment. thanks
Why has Vanguard UK added yet more funds inside their lifestrategy and target date retirement funds. Why do you need 13 funds in a fund of index funds.
Bonds are hopeless in the current inflationary environment. . At least if you wait a few years you'll get your money back from stocks. With bonds you're guaranteed to lose money to inflation. Better to put your cash in NS&I at over 6 percent guaranteed if you're nearing retirement.
@bluegtturbo You can't put your money into NS&I in a pension scheme, plus you would lose out on the tax relief. When you contribute into a defined contribution pension scheme, be it company, private or sipp etc you get back 25% added on top of your contribution for basic rate tax payers, plus a lot more for higher rate tax payers.
Stocks and bonds correlate in periods of high inflation was well known from historic markets and they do not ‘usually act in opposition’. Shame that you kept failing to mention this before
@@edin2934 before means before - I.e. in all his previous videos where he kept repeating the story about how bonds and equities worked in opposition, which they clearly have not always done if you look back through history. And when don’t they - in times of high inflation.
Also shame that most financial channels advertised bond funds as less risky, less volatile than stocks. Well, not so much recently. Bond funds have been battered like never before.
Ramin is great, but I find he gets overly tied to some viewpoints. The recent one is this idea of individual bonds being so much superior to bond funds. A bond fund is just a basket of individual bonds, so it doesn't take much thought to realise they can't be that different! The main difference is that an individual bond falls in duration over time while a fund doesn't (a 10 year gilt becomes a 9 year gilt a year later). Sure this reduces price volatility over time, but it also means you lose the benefits of longer duration over time, such as protection to stock crashes. Ultimately bond fund price drops will be offset by yield increases if you hold it for long enough, so it really isn't that different to an individual bond.
@goncaloaguiar Which stocks and shares isa's aren't supporting fractional shares. I know vanguard UK isa or sipp doesn't allow buying or selling fractional shares of etfs on their own platform. But I wasn't aware of other platforms doing that, I've always been able to buy fractional shares on Hargreaves Lansdown platform
I was too early I guess on that Vanguard Intermediate Corporate bond fund; I know the 10-yr UST ran up to about a 5% yield, but I definitely did not expect to lose 2.35% in 6 days with this bond fund. Still not understanding why it fell so much so quickly.
Due to the compounding effect of time. Ignoring coupons, 1% drop over 1 year you simply multiply the nominal by 0.99. Over 10 years, you multiply the nominal by 0.99 to the power of 10.
@@josepha9313 Ok Let me give it one more shot. If interest rates were 1% pa how much would you pay me now for $100 in one years time ... $99 (this would be the price of the bond assuming no interest payments) so... not much difference. If interest rates were 1% pa over 10 years you would need to pay me 90.4 (99^10) to receive $100 in 10 years time. So for every 1% drop in the ten year rate the price of the fund would drop by nearly 10%.
@@edcoppen search on your favourite platform for money market funds - examples are abrdn Sterling Money Market I Acc, L&G Cash Trust I Acc, Royal London Short Term Money Mkt Y Acc. Vanguard also have one.
If you're not drawing a pension, why on earth is anyone concerned with volatility, surely the portfolio should be based around growth, 100% equities only. If retired and drawing a pension then agreed, this 3 part solution will reduce volatility and should be considered, however the pension life still may have many years to run so again, I'm not convinced. Surly only the few want annuities these days based on draw down's popularity, so there's no immediate end date and concern over the timing of a potential huge market crash has vanished, so why are people so concerned, more importantly, why do IFAs concentrate on reducing volatility like we're living in the past? Justifying their fees, making this sound all too complex for the average? One Global index fund will suffice 95%.
Baloney. I watched every video this guy put out and the whole idea is for him to give what he thinks which is also called advice. Can package it anyway you want but don’t spend words come on now you’re better than that
@@missouri6014he isn't allowed to offer advice as doing so would require a license as per UK regulations. If you are in the UK you would know this, if you are not find a local advisor in your country. Making dunce comments shows your lack of financial knowledge.
I just really don't see the point of diversification, all you do is pay upside for less vol, which over the longer term should not matter. If you want to invest it should just be 100% stocks and just not be such a cry baby over the vol....also there have only been 5 occurrences of stocks and bonds down in the same year in the past 100 years, its not even worth thinking about!
7:11 Tell me you don't understand gold without telling me. It's ok, almost nobody understands it. Gold responds to monetary inflation. Commodities outside of gold have all sort of problems as store of value assets because they cannot be stored easily. This creates drag through things like oil contract negative roll yield during contango as an example. Sorry, but this channel is amateur hour.
If you asked any one in the UK what a money market fund is they wouldn’t have a clue - please don’t use American finance labels - it’s not good for your audience
You have to look forward not backward. Time to sell all bonds was 2020 when they were return free risk. Now bonds are good investment. This channel is amateur hour.
Bonds are for suckers. Literally. Funding debt for others and getting peanuts as a reward 😅 might as well through bananas at an ape and hope for a middle finger.
@@roger4880 You are the typical investor. Fixating on what was and not what will be. Easy 20%+ return on bonds within 2-3 years and stocks will be much lower. Watch and see. There will be a time to own stocks again, but it is not now.
