The 98l model refers to an innovative investment portfolio allocation strategy that gained popularity in 2022. It advocates holding 98% of investments in traditional assets like stocks and bonds, and allocating the remaining 2% to alternative assets like cryptocurrencies or collectibles. With markets becoming increasingly volatile, diversification is key for investors to manage risks. This article provides an overview of 98l models, how to choose suitable ones for your portfolio, and tips for comparing different models effectively.
Understand the rationale and benefits of the 98l investment model
The 98l model aims to balance risk versus reward through a mostly traditional yet slightly alternative asset mix. The rationale is that traditional stocks and bonds still offer stability and decent returns for the majority of portfolio holdings. But allocating a small 2% to asset classes like crypto can boost yields during bull runs. This allows investors to tap into upsides of novel assets without overexposing the entire portfolio to their volatility. When chosen wisely, the right 98l model can enhance overall returns while minimizing concentration risks.
Criteria for selecting optimal 98l models for your investment objectives
Here are some key criteria to evaluate when choosing a 98l model: – Risk appetite – Your tolerance for volatility should guide the 98% traditional assets class split between stocks and bonds. More aggressive investors can tilt towards equities while conservative ones should emphasize fixed income. – Alternative asset selection – Consider types that complement the 98% traditional holdings. Assess historical performance, liquidity, regulations and growth outlook when picking the 2% slice. – Fees and accessibility – Opt for easily investable products like ETFs without high fund fees. Models requiring accredited investor status or high investment minimums often aren’t ideal. – Rebalancing needs – Periodic rebalancing is crucial to maintain target 98-2 allocation as assets fluctuate in value. Understand rebalance frequency, costs and processes. – Track record – Models with long histories of maintaining the 98l split through varied market conditions prove more robust and tested.
Tips for comparing suitability of different 98l investment models
Here are some tips for evaluating different 98l models: – Benchmark traditional assets against indexes based on your risk tolerance – i.e. compare stocks portion to S&P 500. – Check that alternative asset history aligns with purported benefits – i.e. does crypto slice provide non-correlated gains? – Compare total returns over various periods and market environments. Models balancing risks deliver steadier gains. – Analyze downside protection – How has the model weathered past bear markets or volatility? – Assess total fees for fairness relative to returns generated and rebalancing effort involved. – Consider manager track record for maintaining allocation and maximizing upside/downside capture. – Review accessibility of investment products chosen – Are they easily traded and liquid? – Verify model aligns with your desired investment horizon and liquidity needs.
The 98l investment model offers diversification benefits by combining mainly traditional asset classes with a small allocation to alternatives. Choosing the optimal model requires assessing risk appetite, desired return objectives, fees, rebalancing needs and managers. Comparing models based on multiple criteria helps verify alignment with personal investment goals.