Full transcript of “How to Build a Stock Market Portfolio With Just 4 Investments”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:00 When it comes to investing in the stock markets, most people think that you need to be an expert to build a good portfolio. You need to pick winners, time the markets, and constantly adjust your positions. But what if you could build a strong stock market portfolio using just four investments? And not only that, this portfolio is designed to grow your money and protect you at the same time. Now, let me tell you this. If you want the mainstream answer on how to build an ideal portfolio in the stock market, then you're going to be told the classic 60% stocks and 40% bonds. And I'll tell you that I just totally disagree with this. Like that's just my opinion. And here's why. When the experts say that you should invest in bonds, that can include corporate bonds,
0:46 mortgage back securities, etc. However, the recommendation is that the core of your bonds be in US Treasury bonds. So they say this because it will produce some interest income for you and it's going to be risk-free. In other words, 40% of your money is going to be safe in bonds right? I'll tell you that I disagree because fixed income loses purchasing power during inflation. So that safe 40% it it's not truly risk-f free. If the true rate of inflation exceeds your rate of interest payments, then you're going to be losing purchasing power. And with treasury bills and bonds, I mean, you're talking about 3 to 4%. And if it's not in a retirement account, then 3 to 4% is going to be your pre-tax
1:34 rate of return. Now, I want to show you what I prefer or what I would consider as more optimal or ideal. And just to be clear, I'm talking about viewing all of your paper investments as a whole. So I'm talking about the combination of your 401ks, 403bs, IAS. So basically your retirement accounts and your taxable brokerage accounts. So I'm not going to be including your primary residence, your rental real estate, physical precious metals, 529 plans because that's intended for education, nor HSAs because that's intended for your health. With that being said, here's how I would structure my portfolio when I view my investments as a whole. 50% towards S&P 500 index funds
2:20 or ETFs, 10% going towards international stocks through an index fund or an ETF, 20% towards gold, and using 20% as your opportunity bucket. And that's it. Four investments. Now, let's break down why this works and why most people over complicate this. So, we're going to be starting off at the core, which is going to be the S&P 500, 50% of your portfolio. So, half your portfolio is going to go into the S&P 500. And I would use an index fund or an ETF. And this is going to be your foundation. Why? Because you don't need to pick individual stocks. is because the S&P 500, like an index fund or an ETF, they're already going to do that for
3:06 you. So, if a company declines within the S&P 500, if you didn't know, it gets removed. If a company grows, then it can get added. So, you're always going to be holding the strongest companies in the market in a variety of industries. So, this is how you capture long-term growth without guessing. Next, we have international exposure, and I would do 10% in international stocks. And most investors ignore this. But I'll tell you, by putting 100% of your money in one country, even the US, that's still a risk. Other countries go through different cycles. And this is going to give you global exposure, currency diversification, and reduce dependence on one economy. So, it's not about maximizing returns.
3:53 It's about reducing risk over time. Now, personally, I would use a fund or ETF for exposure to international stocks, and I would choose one that includes both developed and emerging markets. Developed markets are going to be more stable economies. So, this is going to include Japan, Germany, United Kingdom, Canada, etc. Emerging markets are economies that are growing faster, but they have more volatility. So this is going to include China, India, Brazil, South Africa for example. And by doing this, it's going to automatically give you diversification across regions, sectors, and currencies. Now, here's where the portfolio starts to look different. I would do 20% in gold. Most
4:40 traditional portfolios barely include gold. So why hold it? It's because gold is your insurance policy. When currencies weaken, gold benefits. This isn't about growth. This is about protection. So, I just want you to think about it. So, I'm talking about buying gold on the stock markets, but I just want to use physical gold as an example. If you buy a gold coin and you hold it, then in five years, you're still going to have one gold coin, right? Like, it didn't go to work for you. It didn't multiply into two gold coins. Like you still have one gold coin, but the price of gold will most likely go up in 5 years because it requires more devalued
5:25 dollars to purchase a gold coin. Okay? Why? Because of all the money printing and inflation. Countries and central banks, they can print dollars and currencies backed by nothing, but they can't print gold. Now, moving on, the final 20% I would say is your opportunity buckets. This is where you can take calculated risks and you can allocate this into I and these are just some examples. Let's just say silver, copper, uranium, oil and energy, tech stocks, REITs, real estate investment trusts, Bitcoin, crypto, you can keep it in cash, fixed income. I just just I just say just avoid treasuries or a combination of these. So these are just again some examples.
6:12 So, I'm not telling you to go crazy with wild speculation and lose money. I'm just saying that it's my opinion that it's okay to personalize your portfolio with your conviction plays. But here's my rule. Keep your speculation contained to this 20% because there's a difference between smart investing and gambling. And this structure lets you take risks without risking your entire portfolio. Now a very good question is what does this type of allocation actually achieve? And I'll tell you that it gives you growth through stocks. It gives you protection through gold. It gives you diversification because now you have international exposure as well as commodities. And it also gives you flexibility through your opportunity
7:00 buckets. And most importantly, which I believe that this is key is that it helps you stay invested. So, personally, I would not try to time the markets. Like, in my opinion, the best approach is having a long-term mindset and keeping your money invested. So, yeah, there's going to be ups and downs, but the markets, I'm telling you, they're just designed to go up. Okay? Why? It's because of all the money printing. All the money that's backed by nothing. They print. It causes inflation. Asset prices go up. Listen, I want you to know this. If there's a stock market crash and prices go down, then the central banks and governments, what are they going to do? They're going to come to the rescue. They're going to intervene. They're going to print money and the markets recover and goes to new
7:46 all-time highs. Like that's how the system works. Like you you just have to think about it logically. Like do you think the price of a home like a median price home will ever go back to $50,000 like they were in the 1980s? and they obviously of course that's not going to happen. Do you think the price of a new car will ever go back to $15,000 like they were back in the 1990s? And the answer is no. Of course not. Then why would stocks, gold, or any other asset crash 50% and just stay there? No. Of course that's not going to happen. It's inflation. It's the money printing. There's more devalued dollars floating out there. So it's it's that simple. Like that's a system that we live in. There's ups and downs, but you just need to stay
8:32 invested. Okay. Why do most people fail to build a good portfolio? Because I mean the strategy itself is very simple. And I would say that the hard part is actually behavior. People panic during downturns. They try to time the markets. They withdraw money too early or they never start at all because they think that investing is complicated. But it's not. What's difficult is consistency and discipline. You know, sometimes I'd say less is more. And I like to keep it simple. You know, for people that are glued to their portfolios every day watching their phone, like it's tempting to want to buy and sell and trade like crazy, move things around, but it's dangerous if you don't know what you're doing. Most industry standard portfolios look like this. They say to go heavy on stocks,
9:19 include bonds, which usually means the bulk of it's going to be US treasuries, and very little or no gold. Okay, why do they do it like that? And I'll tell you, it's because the system is designed around financial assets, not real protection. So, I just want to tell you the reality of the situation. Bonds are seen as safe, but in reality, they lose purchasing power in inflationary environments, and gold is ignored. because it doesn't fit the narrative of Wall Street profits. So the bottom line is that most industry portfolios are built to follow the system, not to protect you or maximize smart growth. So the way I see it, this portfolio takes a different approach because it doesn't rely on one outcome.
10:05 Instead, it prepares for multiple scenarios because you never know what's going to happen. If there's a period of growth, then stocks your stocks are going to perform. If there's currency debasement, then gold is going to protect you. For opportunities, your 20%'s going to capture that upside. So, it's better balanced in my opinion, and it's more diversified. So, I just want to conclude with this. At the end of the day, you don't need complexity to build wealth. You don't need to constantly trade. You just need a simple structure, discipline, and time. Now, if you want to see what I'm investing in, I encourage you to visit my Patreon sites. I'm going to leave a link for you down below. It's a community to learn, bounce ideas in our chat room, and stay on top
10:52 of financial news. Thank you so much. I wish you a very nice day. Take care.
