How to Make Your Most Important Wealth Decision in Minutes

Don't let this story happen to you...

My friend's father was a successful banker in his professional life. He earned a great salary and accumulated large amounts of stock in the two major U.S. banks where he worked for years.

This stock constituted the bulk of his retirement savings. He expected it to appreciate in value and provide him with a growing nest egg. He was so confident, he kept more than 80% of his savings in just these two stocks. Then, 2008 came...

One of the banks my friend's father owned was Lehman Brothers. This firm went bankrupt from bad mortgage bets. Shares went to zero in just months.

The other bank didn't go bankrupt, but its shares declined more than 50% during the credit crisis (it has since been acquired by a larger bank).

As you can imagine, this former banker's retirement is now a world away from where it was in 2008. More than half of what he expected to live on for the rest of his life vanished.

It vanished because of one tiny error in what's called "asset allocation."

Asset allocation can seem boring and complex (though it doesn't need to be). And teaching you the right way to do it doesn't make Wall Street any money... That's why you don't hear much about it.

But it's the most important factor in your retirement-investing success.

Simply put: Asset allocation is how you balance your wealth among stocks, bonds, cash, real estate, commodities, and other investments in your portfolio.

Keeping your wealth stored in a good, diversified mix of assets is the key to avoiding catastrophic losses.

If you keep too much wealth – like 80% of it – in a few stocks and the stock market goes south, you'll suffer badly. If you're heavy in real estate (like many folks were in 2006), you'll be wiped out in a big real estate crash (like many folks were in 2008).

The same goes for any asset... gold, oil, bonds, land, blue-chip stocks, etc.

You can get an entire degree learning how to "optimize" these in your portfolio... trying to nail the perfect risk/return ratio. Heck, folks have studied the stuff in-depth and done the math behind asset allocation and portfolio theories and won the Nobel Prize for their work.

But much of the "optimization" that geeks come up with is based on forecasts and past data that are wrong more often than they are right. You can get ahead of 90% of investors with a much simpler process.

First, you start with allocating a little pile of money into an emergency fund... You should keep it liquid as cash in a savings or checking account. It makes sense to put aside enough to last you between three and six months, depending on your personal need for safety.

Once you set aside some cash for emergencies... start with a simple allocation where you decide between just stocks and fixed-income types of securities (bonds). If you have a longer-term view and a higher tolerance for risk, you could make your allocation 80% stocks and 20% bonds. If you are closer to retirement and don't like volatile returns, you could do the inverse, 80% bonds and 20% stocks. Most of us fall somewhere in between.

The point is to select assets – like stocks and bonds – that are not perfectly correlated, meaning their price movements aren't tied to each other. Combining them in your portfolio will smooth out your overall returns.

You can easily get more complex, dividing your categories (or "allocations") into domestic and international stocks, and corporate, government, and municipal bonds, and so on. You can even add a small allocation to precious metals, or what I call "chaos hedges."

But before you get into all that, just start simple.

Just remember to start thinking about your overall portfolio. Asset allocation... it's the only way to build wealth long term and sleep well at night at the same time.

To really grow and compound your money over time, your total portfolio needs to make sense. It needs to be more than the sum of its parts.

The problem is that our entire industry tends to spend way too much time focusing on individual stocks... and nowhere near enough on overall portfolio construction.

To make it simple, several years ago, I – alongside a team of our best analysts – helped create The Total Portfolio...

• We took the same approach that big Wall Street funds take...
• We selected our best recommendations from across our research...
• We put them together in one perfectly balanced, fully diversified model portfolio built to grow in any market condition imaginable...
• And we managed it like a hedge fund would – adapting it as the markets changed, adding new positions when needed, and taking profits when the time was right.

If you want any already-made-for-you investment strategy, this is the service for you.

This is Stansberry Research's most important recommendation – and it involves a big change we're making tomorrow that I'm positive is going to make it even more profitable.

If you haven't seen my announcement yet, click here to get the full details.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
February 3, 2025