Sound Investing AAII Q&A, Part 2 — 12 More Questions Answered
Dec 3, 2025
In this installment, the discussion dives into risk-parity portfolios and the volatile nature of gold, with a preference for bonds. Paul explains the origins of the 10-Fund Strategy and its comparison to the 60/40 model. He shares insights on avoiding short-term trends, highlights a double-rung bond ladder for fixed-income diversity, and analyzes growth versus value performance. Strategies for systematic investing in uncertain times are covered, along with the importance of rebalancing and choosing the right bond allocation in retirement.
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Stocks Outpaced Gold; Bonds Cut Volatility
- Long-term S&P 500 outpaced gold by over 3% annually across 50 years, while gold had higher volatility.
- Intermediate government bonds offered much lower volatility and smaller drawdowns than both stocks and gold.
Prefer The 10-Fund Mix For Equity Diversification
- Use the 10-Fund Strategy for the equity portion rather than a single S&P 500 fund if you want diversification.
- The 10-Fund Strategy historically outperformed the S&P 500 and resembles about a 70/30 equity/bond mix in return today.
Create A Layered Bond Ladder
- Build a double-rung bond ladder by layering short-term CD/bond maturities with other fixed-income funds like corporates or tax-exempts.
- Use multiple ladders to diversify yield and interest-rate exposure across fixed-income types.