The all-weather portfolio

How to improve your own financial outcomes by focusing on what matters

Andrew Willis 5 March, 2020 | 1:39AM
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Andrew Willis: The coronavirus, trade tensions, oil prices, the next recession. What do these things have in common? They are all out of your control, unpredictable and likely have no long-term impact on your financial goals.

Morningstar’s director of investor education, Karen Wallace, says that investors are often preoccupied with issues that are out of their reach. Whether it’s the direction of the economy, interest rates, inflation, or the Loonie’s exchange rate, Wallace says that investors are being surrounded by short-term noise that’s distracting them from the things that matter.

Wallace says that it’s important to be aware of these distractions by practicing what she calls an ‘all-weather portfolio’ that focuses on matters within your control and will vastly improve your long term outcomes.

The idea of an all-weather portfolio is to maintain a sensible allocation for your goals (stocks if you’re an accumulator or bonds if you’re retired), hedge against what risks can you can control and tune out short-term market events.

Areas of that should have your attention include…

- Your savings and spending rates. When you get a raise, why not raise your savings rates?

- Your debt management. Always prioritize paying off high-interest debt over making new investments.

- Your portfolio’s diversification by asset class, geography and currency. Focus on holding the right amount of risk for your personal situation.

- Your tax costs. Ensure you’re seizing the right strategies to lower or defer your tax bill.


-The quality of your investments. Are you conducting your own research? Choose high quality, low-cost investments.

These are some examples of long-term matters… that matter.

There’s incessant noise in the markets. Sensationalist headlines, every day, and the continued growth of social media run the risk of derailing your focus and long term plans by appealing to your emotions in the short term. As always, we at Morningstar say ‘don’t sweat the small stuff’ and instead focus on building the best hand for the long game.

For Morningstar, I’m Andrew Willis.

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About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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