Row 59344

Row ID: 59344 | Dataset Entry | Axioma AXP Content Repository

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This page contains data entry 59344 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

What is the purpose of this money?

An investment portfolio starts with a goal. "I want to buy a $100k boat in 5 years" or "I want to retire with $50k/yr income at 40" - that is, an amount and a time frame. No one can tell you what you should or should not be doing without knowing first what your goal is.

Next you need to build an asset allocation for achieving that goal. This means making a pie chart of items that you will invest in. Every time you add money to this portfolio, you will buy the slice of the pie that is smaller than it is supposed to be according to your allocation. The size of the allocation is such that the sum of the total returns of each item has a high probability of reaching your goal amount.

Real estate historically returns 12% and stocks 8%. If you had 75/25 of both, you should estimate a 0.75×12%+0.25×8% (or 11%) return on that portfolio. You can extend that math to any number of slices, or just one.

So, you figure out your goal, calculate the future cost to reach that goal, do the math on how much you can save each month/year whatever, and then calculate what % return you need to make that goal. You then make the aforementioned pie chart looking over all assets, and make a pie chart that according to average returns will make the above sum of total returns (pie chart) meet your chosen goal at your chosen time frame.

It's very mathy, but it works.

**If** Bitcoin fits into that picture, *then* you should allocate to Bitcoin as much as you need to to fill in that slice of the pie. But only pick pie slices you feel comfortable owning. Junk bonds have higher yields than AAA corporate debt, but have risks that say Treasuries dont. *Bitcoin* can, often does, and definitely **will** lose 70% of it's value sometimes. If you personally can't handle that risk and volatility, then Bitcoin is a bad asset to pick for your pie chart. If you *can* diamond had the rough waters, and its average return fits your goal and timeframe, then by all means allocate away.

---

It's a bad idea to pile into just any asset without a plan. It's*so* worth it to plan out what you want to do with your money. And once you nail the math, it starts being fun.

Good luck in your investing career. And don't FOMO into anything or listen to any hype man telling you this or that asset is good for you. Only you can decide what makes sense for your money - make a plan, invest wisely, and conquer the world my friend!

FieldValue
text What is the purpose of this money? An investment portfolio starts with a goal. "I want to buy a $100k boat in 5 years" or "I want to retire with $50k/yr income at 40" - that is, an amount and a time frame. No one can tell you what you should or should not be doing without knowing first what your goal is. Next you need to build an asset allocation for achieving that goal. This means making a pie chart of items that you will invest in. Every time you add money to this portfolio, you will buy the…
label r/cryptocurrency
dataType comment
communityName r/CryptoCurrency
datetime 2024-05-23
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Raw Record

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