Thread by @TihoBrkan

1/ The traffic light portfolio wisdom.

Someone on the street of #Singapore (in the financial area of Raffles Place) recognized me from Twitter last month.

While that's quite funny, it isn't the point of this tweet. They went on to ask what my financial advice would be as we...

2/ ...waited for the traffic light to change. Clearly, it had to be an action-packed, wise & swift answer.

Firstly, I said never to take advice from anyone in the financial industry you don't know and haven't looked into their track record / returns. But if you...

3/ ...insist it would be the following in point form style:

• have a portfolio strategy

• 50% of your money into index funds focusing on the world index (70%) & Emerging Markets (30%)

• 50% into securitized, asset-backed, real estate debt deals (instead of fixed income)

4/ • the whole portfolio will be paying you income

• half of your portfolio is in liquid global equities, the other half in illiquid real estate senior mortgage deals

• focus on the dollar-cost averaging & definitely go global as @RayDalio advises

5/ Bullet points over.

Before all the smart ass comments come from those who don't invest but can argue until the sun goes down — especially due to real estate debt option — let me just say that deal selection is the key with the alternatives.

Also, I'm not selling...

6/ ...you anything. You can do whatever you want with your money.

Having said that, we should all know what the future expected returns on a classic 60/40 portfolio look like.

Moving along, the goal is to be passive on both sides. So, just select a fantastic credit fund...

7/ ...with a great track record and do a hardcore due diligence process on them. Go and see them, talk to them, see what they are doing, constantly be annoying until you feel comfortable with what they are up to.

The one I selected here is from the New York area, focusing...

8/ ...on NYC real estate. Notice that the fund never had a down month and never had a down year (both since 2003). Pretty damn impressing even during the GFC, right?

They only invest in senior debt which means they are ultra-conservative & very defensive. Their average LTV on...

9/ ...on the deals is below 65%. They only fund loans with those who have a great track record & they have many super-wealthy people throwing money at them, so yes, there is a line!

With a portfolio like this, you have a much better chance of making it through the next crisis.

10/ When the crisis comes, direct as much of your contributions & income from credit towards "buying low" & especially the Emerging Markets.

EM economies are only 15% of the global index but they sport 50% of GDP and 85% of the global population. Eventually, it will matter.

11/ With this kind of portfolio, you can just set it to autopilot and check it once a month, once a quarter, or even once a year if you want.

You get your own life back to spend precious time on things that matter & people who are important.

Life is too short.