Baby steps in Asset Allocation for a Value Investor

Fundamentals 05: Basics on how to allocate your net worth to several asset classes from a value investor's perspective. The article was first published on 29 Nov 2020. I have since updated it so that there is a clear “how-to” section as part of section 1. Revision date: 14 Feb 2021 "You should have a strategic asset allocation mix that assumes that you don't know what the future is going to hold." Ray Dalio You invest your savings to protect the purchasing power from being eroded by inflation. You grow your wealth at the same time. If you know which assets will give the best return, you would be an idiot not to put all the savings into this one asset. In reality, you do not know how the future will turn out so you spread your savings into several asset classes. You hope that if one does badly, the others will do well enough to more than offset the bad performance. This is asset allocation. There are two goals in asset allocation: How to achieve returns u