I just bought the book of Principles from Ray Dalio, it is fascinating by just reading a few pages of this book. I need to learn a lot from this genius.
1. Decide how much you can sock away
“Savings equals freedom and security,” Dalio tells CNBC Make It. “How much freedom and security do you need?”
2. Create a diversified portfolio
The next step is to decide what to do with that money. In order to prevent your savings from losing their value, the best choice is to invest your money into a diversified portfolio of assets that increase in value faster than inflation. “Know how to diversify into non-cash assets like stocks, bonds and real estate,” Dalio says.
Here’s his breakdown for what a well-diversified portfolio might look like, according to the book: 30 percent allocated to stocks, 40 percent to long-term U.S. bonds, 15 percent to intermediate U.S. bonds, 7.5 percent to gold and 7.5 percent to other commodities. (The portfolio does need to be rebalanced annually, he adds.)
That mix is intended to do well under any condition, whether the economy is growing or shrinking, or whether inflation is rising or falling, he explains.
3. Learn the market’s long-term cycles
For investors who plan be more active in their investing than just buying and holding in a diversified portfolio, it is crucial to understand the historical patterns of the economy and the stock market.
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- Ray Dalio made $50 billion for his clients, topping list of biggest hedge fund moneymakers ever: Bridgewater Associates made $49.7 billion in total profit since its inception, according to data from LCH Investments. The firm is the world’s largest hedge fund, managing about $160 billion, according to its website. Dalio started the firm in 1975 out of his two-bedroom apartment in New York.Bridgewater’s Pure Alpha fund returned 1.2 percent last year, according to data from Absolute Return.
Bridgewater is the world’s largest hedge fund, managing about $160 billion, according to its website. Dalio started the firm in 1975 out of his two-bedroom apartment in New York. He is now worth an estimated $17 billion, according to Forbes.
