Cockroach-inspired portfolio?
Ever heard of the cockroach portfolio? It's a method that evenly distributes your money across four asset types: Equities, Gold, Cash, and Bonds. Each asset is chosen based on its performance in different economic conditions like Growth, Inflation, Deflation, and Recession, providing stability during volatile situations.
During Growth - Use Equities:
When the economy is doing well, like when people start spending more money, businesses, in turn, will make more money too. Stocks, which are tiny pieces of ownership in these businesses, can become more valuable during this time. So, if you own stocks, you can see the value of your investment go up.
Additionally, when companies are making more money, they might share some of this profit with you in the form of dividends, which is like getting a little bonus just for owning the stocks.
During Recessions - Use Cash:
When lots of people are losing their jobs and businesses aren’t doing too well, it’s a good idea to have some cash saved up. Cash is great because it doesn’t lose its value during recessions, and it’s always ready to use.
During Inflation - Use Gold:
When there’s inflation, the value of money goes down. This means you’ll be buying less with the same amount of money. Gold, however, often keeps its value better than money during inflation.
So, when prices are rising and money buys less, gold can still buy about the same amount of things, or even more. That’s why people sometimes buy gold when they think inflation will hit.
During Deflation - Use Bonds:
When there’s deflation, prices of goods and services decrease, which means your money can buy more than before. Bonds pay fixed interest, so if you own bonds during deflation, the money you get from them can buy more because of the lower prices.
While the typical investment approach suggests a 60% equity and 40% debt allocation, the Cockroach Portfolio offers better resilience in volatile markets. Although it may not yield high returns, it ensures stability. Remember, high risk equals high return, and the Cockroach Portfolio prioritizes stability over risk.
Do you use the Cockroach Portfolio method? Share your thoughts with us!
During Growth - Use Equities:
When the economy is doing well, like when people start spending more money, businesses, in turn, will make more money too. Stocks, which are tiny pieces of ownership in these businesses, can become more valuable during this time. So, if you own stocks, you can see the value of your investment go up.
Additionally, when companies are making more money, they might share some of this profit with you in the form of dividends, which is like getting a little bonus just for owning the stocks.
During Recessions - Use Cash:
When lots of people are losing their jobs and businesses aren’t doing too well, it’s a good idea to have some cash saved up. Cash is great because it doesn’t lose its value during recessions, and it’s always ready to use.
During Inflation - Use Gold:
When there’s inflation, the value of money goes down. This means you’ll be buying less with the same amount of money. Gold, however, often keeps its value better than money during inflation.
So, when prices are rising and money buys less, gold can still buy about the same amount of things, or even more. That’s why people sometimes buy gold when they think inflation will hit.
During Deflation - Use Bonds:
When there’s deflation, prices of goods and services decrease, which means your money can buy more than before. Bonds pay fixed interest, so if you own bonds during deflation, the money you get from them can buy more because of the lower prices.
While the typical investment approach suggests a 60% equity and 40% debt allocation, the Cockroach Portfolio offers better resilience in volatile markets. Although it may not yield high returns, it ensures stability. Remember, high risk equals high return, and the Cockroach Portfolio prioritizes stability over risk.
Do you use the Cockroach Portfolio method? Share your thoughts with us!
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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