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Summary

In this informative video, the host, Ah Zhu, delves into the concept of asset allocation to reduce investment volatility. He emphasizes the importance of not putting all eggs in one basket, even metaphorically, and highlights the need for a diversified portfolio that includes stocks, bonds, real estate, gold, and alternative investments like Bitcoin and Pokemon Cards. Ah Zhu shares his personal investment strategy, tailored to his risk tolerance and long-term goals, and hints at future adjustments he might make once he retires abroad, focusing on generating regular income through dividend stocks and preferred shares.

Takeaways

• 📈 Asset allocation aims to reduce the volatility of an investment portfolio by diversifying across different assets.
• 🧳 The analogy of not putting all eggs in one basket highlights the importance of spreading investments to avoid total loss in case of a single event.
• 🔢 Technical knowledge such as Covariance, Standard Deviation, and Systematic Risk underpins asset allocation but is simplified in the speaker's personal strategy.
• 🎯 Investors should consider their investment goals, risk tolerance, and investment horizon when deciding on asset allocation.
• 🏦 Younger investors with a higher risk tolerance might lean towards riskier assets like stocks and venture capital for higher returns.
• 👴 Older investors with established savings may prefer defensive assets like bonds and preferred stocks for stability and liquidity.
• 🏠 The speaker's asset allocation includes real estate, stocks, gold, and other alternative investments like Bitcoin and collectibles.
• 📊 Diversification helps to mitigate company-specific risks, and holding at least 30 different companies can significantly reduce these risks.
• 🌐 Geographic and sector diversification in stocks can further enhance the risk reduction benefits of a portfolio.
• 🤑 The speaker's investment focus is on wealth growth, taking advantage of Hong Kong's low tax system, and is prepared for a long-term investment horizon.
• 💰 The speaker's future adjustments to asset allocation may include a shift towards income-generating investments and a continued focus on diversification across global markets.

Q & A

What is the main purpose of asset allocation according to the video?

The main purpose of asset allocation is to reduce the volatility of your investment portfolio by diversifying investments to achieve more stable returns and minimize the chances of significant ups and downs within a short period.

Why is it a mistake to think that asset allocation is just about buying different stocks?

It's a mistake because even if you spread your investments across different stocks, if all those stocks are in the same sector or market, you could still lose everything if that market faces a downturn, creating a false sense of security.

What are some technical terms related to asset allocation that the speaker mentions might be covered in a formal lesson?

The speaker mentions terms like Covariance, Standard Deviation, and Systematic Risk as part of the technical knowledge that might be covered in a formal lesson on asset allocation.

What factors should one consider when deciding on their asset allocation?

Factors to consider include investment goals, risk tolerance, and investment horizon or time frame.

What types of assets does the speaker mention in the video?

The speaker mentions stocks (including common stocks, preferred stocks, ETFs, and dividend growth stocks), bonds, real estate, commodities like gold and silver, and alternative investments such as cryptocurrencies like Bitcoin, and collectibles like antique cars, watches, and Pokemon Cards.

What is the speaker's current investment goal and risk tolerance?

The speaker's current investment goal is wealth growth, aiming to increase assets while taking advantage of Hong Kong's low tax system. The speaker has a higher risk tolerance than average, not getting too worried even if their assets drop by a third.

How does the speaker's age and profession affect their investment strategy?

Being 35 years old and a full-time trader, the speaker has a longer investment horizon and a stable income to cover daily expenses, allowing for a more aggressive investment strategy with a focus on growth.

What is the speaker's current asset allocation?

The speaker currently has 30% in real estate, 40% in stocks, 15% in gold, with the rest in bonds and alternative investments, mostly gold.

Why does the speaker invest in a diversified portfolio of stocks?

The speaker diversifies their stock portfolio to reduce company-specific risk, ensuring that if one company faces issues, it won't significantly impact the overall investment.

How does the speaker view the role of ETFs in their investment strategy?

ETFs are beneficial as they offer instant diversification and automatically update the investment portfolio by including strong companies and removing weaker ones, based on the index they track.

What changes does the speaker anticipate making to their asset allocation after moving to a foreign country?

The speaker expects to adjust their investment strategy to focus more on generating regular income, such as investing in dividend-paying stocks and preferred stocks, and possibly reallocating their real estate investments to include REITs and properties in the new country of residence.

Why does the speaker invest in alternative assets like cryptocurrencies and collectibles?

The speaker invests in alternative assets because they believe in the underlying technology or potential for appreciation, such as the case with cryptocurrencies and collectibles like Pokemon Cards.

What is the speaker's view on the role of bonds in their current investment portfolio?

The speaker currently holds a small portion in bonds due to the low return rates, but mentions that they might invest more in bonds if they had a larger portfolio, as even a 2% return on a large sum would generate significant income.