The 50/50 asset allocation and the related benefits

You can see the Monday Morning Millionaire Program investing philosophy results below.

On Sept 2, 2010, MarketWatch Assistant Commentary Editor, Jonathan Burton published a paper titled ‘Nifty 50/50’ portfolio keeps investing simple.  Investors only need to study this impactful and actionable article for a few minutes to develop a mindset which will give them investing peace of mind. We have frequently referred to this paper in our blogs. This approach uses three index-tracking exchange-traded funds (ETFs) — one for US stocks, one for international stocks and one for bonds. Half of the money is kept in stocks and the other half in bonds. It is a rebalanced annually to maintain that 50/50 ratio.

Leading up to September 2010 and going back 10 years, this 50/50 portfolio outperformed the S&P500.

Leading up to September 2010 and going back 25 years, this 50/50 portfolio just underperformed the S&P500.

Monday Morning Millionaire Program members know that over the course of a decade, holding an exchange-traded index fund which mirrors the S&P 500 outperforms over 90% of portfolios including professionally managed ones.

Leading up to April 2019 and going back 7 years, the Monday Morning Millionaire Program outperformed the S&P500. Our program differs from Nifty 50/50 in two ways.

First, it keeps half the money in only one ETF (SPDR S&P 500 ETF (Symbol SPY) or iShares Core S&P 500 ETF (Symbol IVV) or Vanguard S&P 500 ETF (Symbol VOO) or the Guggenheim S&P 500 Equal Weight ETF (Symbol RSP).) It keeps the other half in a money market fund (TDB166 now paying 2.13%).

And second, instead of rebalancing annually, our program rebalanced any time that the S&P 500 dropped by 10%. There were four such opportunities in 2018.

The Monday Morning Millionaire Program recently changed the required rebalancing drop to 5% from 10%. Our return roughly equals the S&P 500. Because we keep 50% in a money market fund, our portfolio has half the volatility, that is, half the risk of being fully invested in an index ETF tracking the S&P 500.

We see no reason to change this approach to investing.

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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