What is a proper asset allocation?
We've talked about this in another blog before. Feel free to check it out if you want to understand what your asset allocation should be.
How to Invest Money | Portfolio Management
It starts there. It starts with asset allocation.
Second of all, taking a look at in the equity portfolio, in the portion of your portfolio, there's equities.
Can we find stocks that have either a lower beta relative to the stock market and stronger cashflow?
If we focus on companies that if and when the market falls 10%, they only fall 8%. That's dramatically less volatility. Also, if there is strong cashflow and then there are proven consistent cashflow and proven consistent dividends, typically those companies will have less volatility.
We want to find uncorrelated asset classes and asset class that either doesn't move or is uncorrelated to the market. That might be something like a private debt. Perhaps it's a private equity, maybe it's a limited partnership or a private real estate investment.
It is important to factor in volatility what you're able to stomach, and this has to be done in conjunction with a plan. It has to be done in conjunction with a cash flow projection for your needs, for your retirement, for what it looks like for you.
