The Balanced Portfolio: Your Key to Long-Term Wealth
Feb 16, 2025Hello Stoic Investors,
Today, I want to talk to you about a perfect strategy for those who seek stability and long-term growth without unnecessary stress.
Not every investor is trying to chase the highest returns in the market.
Some of you might prefer to make a bit less but sleep better at night.
If that sounds like you, here’s a safe and low-stress strategy to follow before your next paycheck.
The Balanced Portfolio: Growth with Safety
This approach allows you to invest confidently while ensuring your portfolio remains resilient, even in uncertain times.
Here’s how you do it:
Step 1: Use the Right Investment Platform
Before anything else, ensure your platform provides access to ETFs. If it doesn’t, switch to a platform that does.
A good platform gives you the tools you need to invest efficiently without unnecessary fees or restrictions.
Step 2: Split Your Investment into These Two ETFs
- 80% in VWRL (VT - U.S. equivalent): This ETF invests in over 3,000 companies globally, giving you broad exposure to the stock market for long-term growth.
- 20% in IGLT (TLT - U.S. equivalent): This ETF invests in high-quality government bonds, balancing the portfolio by adding stability, especially during market downturns.
This combination provides a mix of growth and security, making it an excellent choice for investors who want a simple, effective strategy.
Step 3: Rebalance Once Per Year
On January 2nd of each year, take a few minutes to review your portfolio.
If your allocations have drifted too much from the 80/20 split, meaning stocks or bonds have grown disproportionately due to market fluctuations, adjust them back to their original proportions.
This keeps your risk and return levels consistent over time.
By investing £700 per month, by the time you turn 60, you’ll have accumulated £1,000,000 for your retirement (though market fluctuations, inflation, and other economic factors may influence the final outcome).
This strategy doesn’t require daily monitoring or constant tweaking—just discipline and patience!
So, note down these 3 steps to have a balanced portfolio and start investing today:
1. Use the right investment platform: Ensure you have access to ETFs with low fees.
2. Follow a balanced portfolio: Invest 80% in global stocks (VWRL) and 20% in government bonds (IGLT) for growth and stability.
3. Rebalance yearly: Keep your risk in check by adjusting your allocations back to 80/20 every January.
