eToro Post – Where does the All Seasons Portfolio fit in your wealth structure?
A common question that I get around the All Seasons Portfolio strategy from investors, especially asked by the not-yet-old ones, is why one should invest in a low risk portfolio with decreased volatility. The less skeptical investors also add a question about where the ASP fits in one’s overall wealth allocations.
Naturally, regardless your age and investment horizon, lower risk portfolios are beneficial as they reduce the stress experienced during panicked markets. Even though the expected absolute return any year is also lower, the decreased volatility will mean a smoother ride with similar long-term annual returns
Mainly, it is a matter of narrowing the cluster of outcomes of each year around a mean, and avoid the big swings from one year to the next. But it doesn't necessarily mean you should devote all your savings to a low-risk strategy and completely abandon the more "exciting" investments.
When this is understood, a common follow-up question is where a portfolio such as the All Seasons Portfolio fits in the management of your overall wealth.
The All Seasons Portfolio should be the stable portfolio at the core of your assets, on top of which you can build with riskier investments. Therefore, to better understand this, in this post, first published on my eToro feed, we explore more closely how it fits in your personal finances.
