Billionaire investor and founder of hedge fund Bridgewater Associates, Ray Dalio has shared his simple investing mantra to build an all-weather portfolio that can balance risk in amid a volatile equity market.
Speaking to Investopedia on a range of topics, including how he ensures risk balance and steady returns, Ray Dalio noted that his mantra is “investing in 15 good uncorrelated return streams, risk-balanced”.
An uncorrelated asset is an investment that has little to no correlation with the traditional asset classes such as stocks and bonds, hence stabilising your portfolio during a market downturn. Over the years, Ray Dalio has been big on safe haven options such as gold.
How does Ray Dalio ensure return on investments?
Speaking to Caleb Silver on ‘The Investopedia Express’ on 5 December 2024, Ray Dalio shared how he evaluates his investment choices.
“My mantra of investing is: 15 good uncorrelated return streams, risk balanced. I want to start there because I know that if I can pick good investments and they’re uncorrelated investments, I won’t lower my return. (This is) because I’ll have the average of those returns. And but I will lower my risk by up to 80%” he stated.
Dalio noted that investing is always risky, to the first method to ensure returns is to risk balance, calling it his “combination basket” and “all weather portfolio”.
What should you consider while building ‘all-weather portfolio’?
According to Ray Dalio, the current equities market is unpredictable and full of disruptors. Thus, it is wiser to build your portfolios around all possible economic scenarios that can survive both rising and falling economic growth.
He leans towards gold and commodities, long-term bond investments, and few short-term bonds to balance overall risks, Ray Dalio suggested on the channel.
Here’s how much gold Ray Dalio recommends you should hold
Speaking to Zerodha co-founder Nikhil Kamath on 21 December for WTF podcast, Ray Dalio said he remains bullish on gold and recommends 5-10% allocation in the asset, but not more than 15%, adding he also holds the yellow metal.
According to the 76-year-old ace investor, gold provides a low real annual return of about 1.2%, but is highly diversifying, “Because when the other parts of the portfolio do very badly — because of certain things like stagflation or debt issues — then gold does very well”.
The billionaire has been proved right. Gold and silver have been on a bull run since last year with no signs of slowing down in the new year. As of 19 January, MCX gold prices jumped to a new record high of ₹1,46,328 per 10 grams. Meanwhile, MCX silver rate today surged to a fresh high of ₹3,19,949 per kg.
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