Hello and thank you for being here. In this section of episodes, we’re focusing on the principles of a well-constructed portfolio. But first, settle those shoulders and take that breath.
I want to introduce you to the concept of slow money and fast money. Fast money is day to day money, your pay cheque and spending. While, slow money, is planned money, it’s the money we will need far out into the future: money for retirement, buying a home, vacation property, or putting your children through school.
Slow money affects all of us and confuses most of us. To provide a simple framework, I invite you to think about designing something built to last. Think of a house that not just your family, but your family’s family could comfortably inhabit. That house: would be built for function, prioritizing timeless design over current trends, and built with materials to weather many seasons. A well-built portfolio is beholden to the same constructs. And, if done correctly, like timeless design, its value will increase with age.
The most interesting assets are those things you never have to sell. Needing to sell at some point in the future comes with a host of inefficiencies: selling commissions, taxes, and most detrimentally it stops the magical work of compounding, which can’t start again until you find new assets to buy.
As humans we are prone to distraction and in action. Instead create a portfolio that automatically incorporates best practices and proven behaviours. Specifically: portfolio rebalancing and tax loss harvesting.
Your investments time horizon is long. Investments programmed to work for a specific future, break when the world changes direction. Diversify across countries, currencies, industries, and companies. That way, no matter what the world looks like, your portfolio can prosper.
We are talking about your life savings. At all costs we must avoid permanent loss of capital. While markets can go down in the short term, they have always recovered in the long term. The only risk to an anti-fragile portfolio is panic selling. Ensure your portfolio can recover, and in bad times give it the time it needs.
Returns compound but so do costs. Ensure the cost of your portfolio is justified and explore comparable portfolios that have a lower cost structure. Think about the elements of timeless portfolio design. Does your portfolio meet the mark?
A well-built portfolio isn’t about just respecting the money you have saved, it’s about respecting who you will be in the future. With that in mind, as you move forward with whatever lies ahead, remember that wealth is a state of mind not a number.
The ideas in these episodes are not mine alone and are based on my learning of time-tested principles. I am grateful for the work that has been done by people like Naval Ravikant, Eckhart Tolle, James Clear, Morgan Housel, Nick Maggiulli, Brian Portnoy, Derek Sivers, Carl Richards, Cameron Passmore, Benjamin Felix, Michael Kitces, and many others.
A New Direction for the Future of Financial Services –Andreas W. Hansen and Martin Gronemann
WhitePaper: A New Direction for the Future of Financial Services — ReD Associates
This content is for informational purposes only and should not be construed as advice or recommendation. Past performance does not guarantee future results. Please consult a licensed financial professional before making any investment decisions.