We’ve been talking about real estate and mortgage notes this week. Both are powerful cash flow investments, but they need a strong foundation. It all comes down to making your money bulletproof…
That’s where the concept of an asset allocation guide comes in.
The idea is to spread your capital out over a range of robust assets. That way you are insulated from economic uncertainties while positioned to grow your money over time.
A robust asset allocation model will consist of:
- 10-20% Strategically Warehoused Cash
- 5-20% Gold
- 5-20% Bitcoin
- 5-20% Capital-efficient Stocks
- 20-50% Cash Flow Investments
- 0-5% Alternative Investments
This is how we create a modern Permanent Portfolio. It’s all about building a personalized asset allocation guide. That guide determines how much of our total savings we allocate to each bucket.
Here’s my current asset allocation guide:
- Strategically Warehoused Cash: 10%
- Gold: 8.5%
- Bitcoin: 28.5%
- Capital-efficient Stocks: 7%
- Cash Flow Investments: 45%
- Alternative Investments: 1%
Building out a model like this is how we make our money bulletproof and create extra streams of income. This is how we put assets and income on the same team.
Remember, strategically warehoused cash is protected from inflation. Gold and Bitcoin are reserve assets for generational wealth preservationhttps://phoenicianleague.com/putting-assets-income-and-taxes-on-the-same-team/. Meanwhile, capital-efficient stocks enable us to compound our money with world-beating businesses positioned to capitalize upon macroeconomic trends.
These first four investment buckets provide us with both financial security and complete liquidity. We can leverage these assets at any time to cover expenses or make larger investments.
At the same time, cash flow investments provide us with steady passive income month after month, year after year. And unlike retirement accounts, there are no restrictions on this income. We can use it to cover expenses or funnel it into new investments. The choice is yours.
Then our alternative investments can provide us with resiliency and flexibility in the face of any challenges – either economic or personal. This is an area that’s often overlooked.
Put it all together and what do we have? To my way of thinking, our asset allocation guide is a lifestyle plan.
Nothing in here is about retirement. It’s certainly not about “getting rich”. Not in the materialistic sense, anyway.
Instead, this is about mapping out a personal financial plan that enables us to convert the fruits of our labor into permanent wealth and consistent income. That’s how we build a solid foundation such that we can live this life on our own terms.
In other words, this is about freedom and peace of mind. That’s what’s most important to me.
And here’s the thing – there’s no time or age limit on this thing.
For those who are just getting started with their finances, it’s just a matter of building out your model over time. I know it seems daunting at first… but you’ll be amazed at how well this approach works. I say that from experience—I started with no assets and a small income.
And for those who have already built a nice little nest egg – there may be opportunities to reposition what you’ve built into more dynamic assets that also provide you with monthly income. Some of these strategies are even actionable inside of self-directed retirement accounts for those who have funds already tied up in them.
So this approach is fully diversified and customizable. That’s why I relate it to a modern version of Harry Browne’s old Permanent Portfolio concept.
We’ll talk more about the tax implications of this in another entry on Monday. And then we’ll go much deeper and look at specific examples at our live event next Wednesday.
As a reminder, we’re calling that event The Strategic Investor’s Playbook: Bulletproof Money, Consistent Cash Flow. It’s happening on May 14 at 3:00 pm Eastern.
I expect the core presentation to run for an hour or so. Then we’ll open it up to unlimited Q&A… and no question is off-limits. If you ask a question, you’ll get an answer. We don’t cherry pick.
So I hope you can set aside some time to join us live next week. I’m excited for the event, and I think it will be valuable for anyone who finds these ideas interesting.
If you can join us live, please register in advance. You can do so at: The Strategic Investor’s Playbook Webinar Registration
Have a great weekend!
-Joe Withrow