Dalio’s ‘Holy Grail’ investment strategy
“The Holy Grail of investing is to find 10 to 15 good, uncorrelated return streams,” Dalio explained in a video posted to his YouTube channel.
“If you find a number of return streams, a number of investments that are good and uncorrelated, you will have the average return of those so you don't lessen your return… But at 15, you'll eliminate 80% of your risk, so you'll improve your return-to-risk ratio by a factor of five.”
Dalio added that there’s “no way” to improve your ability to pick winning investments by a factor of five because it’s a highly competitive game. But with his Holy Grail strategy, he said, investors can dramatically boost their return-to-risk ratio through smart diversification.
While he didn’t name specific assets in that clip, Dalio has long emphasized the importance of diversification — and recently, he singled out one time-tested asset as a necessary component of a resilient portfolio: gold.
“People don't have, typically, an adequate amount of gold in their portfolio,” he told CNBC. “When bad times come, gold is a very effective diversifier.”
Long viewed as the ultimate safe haven, gold isn’t tied to any single country, currency or economy. It can’t be printed out of thin air like fiat money, and in times of economic turmoil or geopolitical uncertainty, investors tend to pile in — driving up its value.
Over the past 12 months, gold prices have surged by more than 35%.
One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of American Hartford Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold, making it an option for those seeking to ensure their retirement funds are well-shielded against economic uncertainties.
When you make a qualifying purchase with American Hartford Gold, you can receive up to $20,000 in precious metals for free.
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Learn MoreBuffett’s advice
Dalio has a point: dramatically improving your ability to pick winning investments is extremely difficult. Even Warren Buffett — one of the greatest stock pickers of all time — doesn’t think that’s a realistic approach for most people.
“I do not think the average person can pick stocks,” he stated bluntly at Berkshire’s 2021 shareholders meeting.
Instead, Buffett champions a much simpler strategy, famously stating, “In my view, for most people, the best thing to do is own the S&P 500 index fund.”
This approach gives investors broad exposure to 500 of the largest publicly traded U.S. companies across 11 sectors — offering built-in diversification without the need for constant monitoring or active management. In that sense, it echoes Dalio’s emphasis on spreading risk across multiple strong investments.
The best part? Anyone, regardless of wealth, can take advantage of this strategy. Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change.
Signing up for Acorns takes just minutes: link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.
Passive income — even in a down market
For those looking to diversify beyond the stock market, real estate offers a compelling alternative. While it experiences cycles like any other asset, real estate doesn’t depend on a booming market to deliver returns.
Even during a recession, high quality, essential real estate can continue to produce passive income through rent. In other words, you don’t have to wait for prices to rise to see a payoff — the asset itself can work for you.
Buffett has often pointed to real estate — especially rental properties — as a textbook example of a productive, income-generating investment.
In 2022, he remarked that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check.”
New investing platforms are making it easier than ever to tap into the real estate market.
For accredited investors, Homeshares gives access to the $36 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
With risk-adjusted target returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets.
If you’re not an accredited investor, crowdfunding platforms like Arrived allow you to enter the real estate market for as little as $100.
Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals, curated and vetted for their appreciation and income potential.
These are a few examples of properties from Arrived. Check out the full list of single family residential homes and vacation rentals currently available.
Backed by world-class investors like Jeff Bezos, Arrived makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process allows accredited and non-accredited investors to take advantage of this inflation-hedging asset class without any extra work on your part.
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