Money Rehab with Nicole Lapin
Portfolio Playbooks: How the Greats Invest Their Money
Tue, 04 Mar 2025
You may have seen the news last week that the consumer confidence index fell by 7 points this month, marking the largest drop since August 2021. Translation? People are getting nervous about a recession. But here’s the thing—you don’t have to panic just because the economy is. Even if you’re skeptical about the marco-economy, you can create confidence in your own micro-economy by taking the reins of your investments. So today, Nicole is showing you four asset allocation strategies designed to help you weather any financial environment. In other words: four recipes for a portfolio that provides growth in good economic times, and stability in tough economic times. Pre-order Nicole's upcoming book The Money School HERE! All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC. Treasury accounts offering 6 months T-Bills are offered by Jiko Securities, Inc.,member FINRA & SIPC. Securities in your account are protected up to $500,000. For details: www.sipc.org. Banking services and the Bank Accounts are provided by Jiko Bank, a division of Mid- Central National Bank. For U.S. Investments in T-bills: Not FDIC Insured; No Bank Guarantee; May Lose Value. Treasuries risk disclosures, see https://jiko.io/docs/treasuries_risk_disclosure.pdf. See public.com/#disclosures-main.
Chapter 1: Why is Public my favorite brokerage for bonds?
It's me talking about public again, obviously. Are you surprised? It is my favorite brokerage after all. By now you know Public is the only place I personally buy bonds. If you haven't heard my spiel, in the olden days, I would buy treasuries through the government website and it would always take forever. And also the branding was horrible.
It kind of looked like the Toys R Us website back in the day. But with Public, it's simple and easy to invest in treasuries right from your phone. There are literally thousands of bonds to choose from on Public, not just government bonds, corporate bonds too. You can use Public for more than just your bond investments, of course.
On public, you can invest in stocks, ETFs, options, crypto, and they even have a high yield cash account where you can earn 4.1% APY on your cash. And there's an exciting new offering on public that I cannot wait to tell you about. Now you can invest toward your future self through retirement accounts. On public, you can open a traditional IRA or a Roth IRA or both. I mean, why not?
If you're looking for a simple yet sophisticated investing experience, head over to public.com slash money rehab. One more time because trust you will thank me later. Public.com slash money rehab. This is a paid endorsement for public investing. Full disclosures and conditions can be found in the podcast description.
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I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Well, my fifth book, The Money School, launches today. Yay. As you know, if you've listened to yesterday's episode, my latest book is all about proven investing strategies to grow wealth.
And so to celebrate this week, I'm sharing some of those investing strategies here on the pod. In picking the first topic from my book, I landed on asset allocation pretty quickly because I think this is the cheat code we need right now. You may have seen the news last week that the consumer confidence index fell by seven points this month, making it the largest drop since August of 2021.
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Chapter 2: What are the benefits of investing with Public?
The goal is to achieve long-term growth while lowering risk from the volatile stock market. The financial whiz David Swenson of Yale's Epic Endowment gave some insight into the mix they use to consistently outperform other investment strategies. When Swenson first took over, the fund was mostly U.S. equity, bonds, and cash.
Under his leadership, the Yale endowment has grown to the second largest in the country with a value of over $40 billion.
In roughly largest to smallest percentage of the portfolio, it consists of absolute returns, so short-term investments like options that focus on generating profits, venture capital, leveraged buyouts, foreign equity, real estate, cash, and fixed income investments like bonds, natural resources, and U.S. stocks.
The endowment model has historically been successful for several reasons, but namely being so diverse that it's shielded against big losses. Even if you get an F in one class, as long as you get an A in the rest, after four years, your GPA is gonna be fine. That's how this portfolio works too.
By investing in asset classes with low correlation to one another, the portfolio can weather different economic conditions better than a traditional stock bond portfolio might. for instance during periods when the stock market is down real estate or hedge funds might do well cushioning the portfolio against large swings number three the ray dalio portfolio Ah, the famous all-weather portfolio.
This model was first introduced by Ray Dalio. I've mentioned him a bunch on the show before, but here are the highlights. He's the hedge fund manager behind Bridgewater Associates, the largest hedge fund in the world with billions under management. He's widely considered one of the most successful investors of our time. When Ray talks, investors listen.
He keeps the exact recipe for his secret sauce hidden and it isn't easily duplicated on a personal level. But here is a rough formula that Dalio says the individual investor could easily use to duplicate the results of the all-weather portfolio. 7.5% commodities, 40% long-term bonds, 7.5% gold, 15% intermediate-term bonds, and 30% stocks.
This mix is all about covering your bases to benefit from whatever market conditions come your way, whether that's a bull market, a bear market, inflation, or deflation. The portfolio has actually weathered those four economic environments over time. When historically backtested, this portfolio made money 85% of the time.
It also would have lost just 20% during the Great Depression, while the S&P 500 lost 65%. In some of the other big market drops like 1973 and 2002, Dalio's construction actually made money while the market overall suffered. Historically, this particular portfolio has made it through bull markets, bear markets, recessions, and everything in between.
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