You have X,000 $ - how to diversify your portfolio?

Suppose you have an "x" amount of dollars (or other currency), but not a very big amount - e.g. you have 10,000 or 30,000 dollars.

How would you diversify? PERCENTAGE-wise?

How about this?
40 % cash
25 % silver
25 % gold
10 % cryptocurrencies

 

This seems like half a question.

Do we have 20k total liquid assets? or 20k extra that we need to put away?

What is the goal for this money? "Diversify" is a nice buzz word that is thrown around but for me we need a goal or strategy for the money and then diversify the approach towards that goal.

Are we trying to preserve it? grow it? hide it?


I think we will all have very different answers without defining the parameters first.

 

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It's a hypothetical question. No exact amounts. Anyone could be in such a situation, so I'm just curious how you'd split up.

The goal would be to preserve it, of course. So that in case of economic crisis, you'd still have "something" left

Actually, it's not the amount that's important. It could be 10 k, 25 k, 50 k... but well under 100 k, because we're not talking major investments. I am trying to imagine the average person's situation.

 

10% Cash
10% Silver
10% Gold
70% Shares

 

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So much in shares? 70 %?

What if the economy collapses?

No problem, it that's your choice, just that I don't understand the reason behind it.

 

I've assumed there won't be a serious economic collapse, but kept the 10% cash, silver and gold as insurance in case there is a problem. I also think that cash would be better than PMs if things went bad and the banks closed.

You need to keep in mind that people have been predicting total economic collapse for many years and if you had stayed out of the stock market all those years, and kept cash, you wouldn't have much to show for it. I also think that buying your own house is a good idea, but this may not suit some people and you probably don't have enough cash for this.

 

It's hard to understand nowadays which assets are the best safe havens during severe economic crisis.

Again: the goal would be to preserve value. And we're talking about small amounts: 10k-50k USD, for example...

I think this question interests a lot of people. E.g. youngsters.


Initially I thought - in a currency devaluation scenario or as a lifetime savings strategy:

40 % cash
25 % silver
25 % gold
10 % cryptocurrencies


Probably, if severe economic crisis doesn't happen, then this would be better for medium-turn:

60 % cash
10 % silver
20 % gold
10 % crypto currencies

 

The amount involved actually changes my percentages so I'll just stick with 20k for now. With smaller amounts of wealth we can actually get creative in the way we store it.

One option that is often overlooked it to simply spend it. There are many household items with good shelf lives that we use with regularity. You can buy 6-12 months of these items (ideally in bulk and when they're on special) and store your wealth that way.

Drink a bottle of wine a week? Buy 6 cases. Go to the shooting range regularly? Grab a few ammo cans full of rounds. Eat a lot of beef? Buy a cow.

Keeping your wealth in items you actually use gives you the added security of having access to those items in a crisis where supply dries up completely.

Need to change that wealth back into cash? Stop replacing the items and draw down your stockpile.

If you're interested in this approach, belangp did a video on the math of such an arrangement that I quite like:



My 'preserve value' distribution for $20,000 with an eye to an economic crisis would be:

20% Cash
40% Goods
25% Silver
15% Gold

I don't do cryptos and I favor silver over gold.

 

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Then, what would you do to preserve wealth?

You have 20,000 USD. And you think gold/silver/cryptos/cash - none of them can preserve wealth?

 

This is true. All purchases & investments must be weighed againts all possible options.

I'm guessing from the response you didn't watch the attached video. This is fair enough, we dont all have time to watch every random video someone posts... I'll try to summarise the concept.


When you buy items in bulk (or buy bulk of an item that is on special) that you would otherwise purchase in smaller quantities on a regular basis there's a saving there that can be seen as a return on the extra money spent.

This can often be anywhere from 30%-50% for periods of as little as 6 months.

This return is not subject to tax or inflation.

It's very difficult to find an investment with as much certantity as this with as high of a return.



For me there are a few extra benefits such as having the products there and not needing purchase regularly allows you to wait until they're on special until you buy them.

Fewer trips to the shops means savings in fuel/time. The goods are there if there is an interuption to supply.


Would love to hear your thoughts shiney...

 

Bad move if the economy collapses as the OP suggests. You want the cash in order to buy shares at bargain prices.

 

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Indeed, I think shares are possibly the worst thing now. Must have been great in the early 2000's and in the 1990's. But now there's always that collapse risk that you have to take into account.

My question was purely hypothetical: I'm curious how some of you would diversify their portfolio.

I get it: good point - one has to grow as well, so merely preserving wealth is not enough.

I think one should invest 33-50 % for growth and the remaining 50-66 % should go into safe-haven investments (PM's, land). Cash should be there merely because it's liquid.

 

Depends entirely upon what scenario and time frame you "preserving your wealth" for.
If it's because you think the market will collapse in the next few years, them forget investments, go cash and metals. Maybe some crypto.
That way when the economy collapses (and by that I don't mean Mad Max SHTF, I'm talking GFC 2.0) you have the cash on hand to buy into assets like shares or property after they have corrected.

If you goal is to stash it away for 20 years, that's entirely different, and you'd just pick mostly quality dividend producing shares.

 

Yes, most people fail to see a scheme to save money as being in fact the direct equivalent as investing at that saving return rate.

 

Paranoia buying product in bulk is a very obvious thing that most smart people already do to some extent. However you must consider, many people have a limited amount of storage space and also many things are perishable. Also a lot of people like variety and do not buy exactly the same things every time, for example you might want to drink one type of beer one week and then a different type of beer the next week. But yeah sure, buying things like toilet paper, laundry powder, nappies, etc in bulk when its on special is an obvious thing that most wise people already do.