Financial Literacy Steps

Most people struggle with financial literacy. These resources provide an initial roadmap for understanding capital markets. Due to the consequential impact of compounding returns, spending time to go through these resources is significantly more important than the average person would assume. Although there is a lot of noise and many overbearing opinions in finance, it is simple enough to get started towards building a future which may seem out of reach. In short, the market is efficient, factors reflect risks, and prices are ultimately correct.

Model Portfolios

It is possible to achieve a simple and optimal portfolio using a straightforward approach to maintain the principles of efficient capital markets and diversification. To be honest, the difference in expected returns between a simple portfolio compared to a more complex portfolio is likely to be minimal relative to the additional effort required in management, as there should be more to life than worrying about a few extra basis points of return.

To demonstrate the construction of a portfolio which is maximally diversified across asset classes, geographies, and styles of risk factor, it is possible to consider more intricate details. The following portfolio is designed to be robust, long-term, systematic, and tax efficient (for most jurisdictions) with a focus on minimizing costs and maximizing returns relative to the risk taken. The amount of leverage can simply be scaled up or down depending on risk tolerance, risk capacity, and objectives related to individual circumstances. The selected funds are subject to availability and would likely change as other funds are released and become available in the future.