Risk Parity Radio Episode 348: Portfolios For 11-Year Olds, Basic Return Stacking, And A Fama-French Kerfuffle
Jun 27, 2024
Learn how to educate an 11-year-old about investing with strategies like the golden butterfly and golden ratio portfolios. Discover the benefits of starting early to build personal finance skills. The discussion also dives into enhancing traditional portfolios with return stacking and the implications of recent updates to the Fama-French database. A lighthearted break is announced, inviting listener engagement while teasing future surprises. It's an insightful mix of child-friendly investing and critical finance discussions!
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Long-Term Equity Portfolio Advice
- For long-term investing, choose a simple, low-cost, 100% equity portfolio and stick with it for decades.
- Avoid switching funds based on recent performance to prevent underperformance.
Intermediate Portfolio & Investing Skills
- For intermediate goals like short-term savings, use a risk parity style portfolio such as the Golden Butterfly.
- Add to the worst performer when investing to avoid rebalancing and tax consequences, teaching practical investing skills early.
Balance Simplicity and Diversification
- Simple portfolios stacking stocks, bonds, and managed futures can have good risk metrics but may lack stock diversification.
- Use 4 to 8 funds for better diversification and easier rebalancing rather than obsessing over extreme simplicity.