Balancing Risk
Barbell Wealth Management®
“Barbell Investing” is all about striving to balance risk within your portfolio.
Using a “barbell diagnostic approach”, Keith DeGreen personally conducts a suitability interview with all potential DeGreen-Direct Platinum, and DeGreen-Direct investors. Our DeGreen-Plus investors benefit from a similar interview by an independent advisor. Click here for details and program requirements.
These interviews are designed to help you decide how much of your portfolio should be allocated to a “Wealth Preservation” Portfolio, and to a “Growth” Portfolio. Keith will also tell you frankly whether our program is suitable for you, and whether you may need the assistance of independent advisors before investing with, or as you invest with, DeGreen Capital Management.
Learn more about Your Personal Suitability Interview.
Striving to Balance Risk
Please look again at the cartoon. It depicts what we believe is the preferred method of attempting to balance risk within your portfolio.
First, we focus on whether you have an appropriate percentage of your overall portfolio dedicated to Estate Preservation and Income. Only then do we invest for Growth through Equities.
On the “left side” of your Barbell Portfolio® we might typically use diversified, U.S.-traded, government and corporate bond (fixed-income) ETFs to access the world’s most promising bond (fixed-income) markets and sectors. However, in a rising-interest-rate environment, such as we are currently experiencing, where the market value of bonds may decline, we use Wealth Preservation surrogates as we strive to protect your purchasing power. These may include, for example, a mixed basket of commodities, and high-quality dividend-paying stocks, within publicly-traded ETFs.
Only then do we seek Growth through Equities (the “right side” of the barbell) by using U.S.-traded ETFs that access the world’s most promising stock (equity) markets and sectors.
Each side of the barbell is joined by a bar: The bar is your financial plan. Whether you have developed a plan yourself, with the assistance of another advisor, or through an independent advisor affiliated with our program, we always encourage you to invest pursuant to a financial plan. Note that we focus strictly on fee-only portfolio management, and not on general financial planning. That is why we are pleased to work with independent advisors who – if you wish – can assist you further. Learn more about our DeGreen-Plus (independent advisors) program.
Let the World Compete
On either side of your barbell, instead of focusing entirely on what are often mediocre U.S.-centric asset classes (defined from another era, prior to globalization), we seek to find the world’s most promising Growth, and Wealth Preservation markets and sectors. Often this includes ETFs that track markets and sectors in our own great country – the United States. But our approach, on your behalf, may also include other developed economies, emerging markets, commodities, and Wealth Preservation surrogates instead of bonds. Our approach requires U.S. markets to compete for your investment dollars on a level (highly disciplined) playing field with the world’s most promising markets and sectors.
“Buy and Hold”, or “Learn and Go”?
We believe that the traditional “buy-hold-and-pray” approach to investing has devastated millions of U.S. investors. However, we do NOT actively trade our clients’ holdings on a daily basis. Instead, we subject our holdings to a daily valuation discipline, and we will either gradually migrate from less promising to more promising markets and sectors, or will immediately go, either partially or completely, to cash or to defensive positions, as circumstances, based on our critical analysis, warrant. We refer to this more responsive, objective, approach as “learn and go”.