I Will Teach You To Be Rich: No guilt, no excuses - just a 6-week programme that works

by Ramit Sethi

Anyway, Swensen suggests allocating your money in the following way: 30% – Domestic equities: UK stock funds, including small-, mid- and large-cap stocks 15% – Developed-world international equities: funds from developed foreign countries, including the United States, Germany and France 5% – Emerging-market equities: funds from developing foreign countries, such as China, India and Brazil. These are riskier than developed-world equities, so don’t go off buying these to fill 95% of your portfolio. 20% – Real estate investment trusts: also known as REITs. REITs invest in mortgages and residential and commercial real estate, both domestically and internationally. 15% – Government bonds: fixed-interest UK securities, which provide predictable income and balance risk in your portfolio. As an asset class, bonds generally return less than stocks. 15% – index-linked gilts: these bonds protect against inflation. Eventually you’ll want to own these, but they’d be the last ones I’d get after investing in all the better-returning options first. A significant amount of maths went into Swensen’s allocation, but the most important takeaway is that no single choice represents an overwhelming part of the portfolio.