risk
Add different drivers, sized small
The rule
A different holding earns its spot only if it moves for a different reason and has a clear job. Keep it small, like a pinch of salt in the dal.
Where it flips
But a slice made too tiny does nothing at all. A 2% gold slice barely changes anything and just adds cost and one more thing to watch. So keep it small, yet big enough to actually do its job.
Swensen told ordinary people not to collect fancy assets. Instead, pick a few broad holdings that move for truly different reasons. Gold, foreign shares, and Indian shares rise and fall at different times. So a small slice of one can help your plan. But only if you name its job before you buy, not after it has already gone up. Size is everything. A 5% slice helps quietly. A 40% slice is really a big new bet in disguise. Small and planned beats fancy and large.
A worked example
A reader adds 10% gold and 15% foreign shares to a shares-and-debt plan, each with a written job: spread across currencies, and a cushion in a crisis. At 5% each they barely move the plan. At 40% they quietly become the plan. [illustrative]
How to spot it
- ·each holding's job is written down before you buy it
- ·the slice is sized on purpose, not a trophy and not the main bet
- ·nothing is added just because it went up lately
David Swensen · Unconventional Success