DIVERSIFICATION, PATIENCE, FOLLOW THROUGH
Most of the secret recipe for strong portfolio performance over the long run is:
OWN ALL OF THE ASSET CLASSES
Here is a simple table that shows annualized performance for each asset class, from 1996 through 2022:
Normal volatility means that most of the time, Large U.S. stocks would be up as much as 27.3% (9.0+18.3) or down as much as 9.3% (9.0-18.3) 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 2022, owned equal amounts of the first 5 asset classes, and about 30% in bonds would have returned about 7.5% annually, with volatility of only 12.2%. That competitive return, featuring lower volatility, is the brass ring of investing.