All Weather Portfolio
As the old saying goes "The rich man plans for tomorrow, the poor man for today."
The idea behind All Weather portfolio construction is that nobody knows what will happen tomorrow.
It might rain or shine, there might be an economic boom or bust, inflation or deflation, war or peace and
when we invest and plan for long term eventually all this will happen. So how do you plan for that?
The all weather portfolio approach is to divide money in equal portions and invest in
everything not just stocks and bonds. There are multiple examples of such portfolios constructed
using mutual funds and exchange traded funds (ETFs).
Example from Anthony Robbins' book “Money: Master the Game.”
||Vanguard Total Stock Market Index Fund
||7- to 10-year Treasuries
||Vanguard Intermediate-Term Treasury Fund
||20- to 25-year Treasuries
||Vanguard Long-Term Treasury Fund
||Gold Shares ETF
||PowerShares DB Commodity Tracking ETF
Another example from Barry Ritholtz
||Total U.S stock
||Vanguard Total Stock
||Vanguard REIT ETF
||U.S. small cap value
||Vanguard Pacific Stock Index Fund
||Vanguard European Stock Index Fund
||iShares TIPS Bond
||U.S. high yield corp bonds
||Vanguard High-Yield Corporate Fund
||U.S. total bond
||iShares Barclays Aggregate Bond Fund