DIVERSIFICATION, PATIENCE, FOLLOW THROUGH

Since you made it this far into the website, I'm going to share most of the secret recipe for strong portfolio performance over the long run:

OWN ALL OF THE ASSET CLASSES

Here is a simple table that shows annualized performance for each asset class, from 1996 through 2021:

Index performance 1996-2021.png

Normal volatility means that most of the time, Large U.S. stocks would be up as much as 28% (10.2+17.7) or down as much as 7.5% (10.2-17.7) in a given year.

You many look at this and think, "I'll just buy and hold midcaps and real estate funds." That would work, except in some years, when "normal" didn't work. Like 2000, or 2008, or 2020. Those were the years everyone wanted to own bonds.

A hybrid portfolio that, between 1996 and 2021, owned equal amounts of the first 5 asset classes, and about 30% in bonds would have returned about 8.6% annually, with volatility of only 11.2%. That competitive return, featuring lower volatility, is the brass ring of investing.