Achieving financial success through investing is challenging, especially for novice investors. However, with education, research, and patience, investors can find that their investment selection and portfolio management skills can pay off. Adopting proven strategies and researching successful investments can help investors make smart choices with their finances. In this regard, referencing Yale’s endowments, which have consistently proven to be profitable over time, could help investors diversify their portfolios and increase their chances of success.
Behind the university’s investment strategies is a simple goal: fund roughly one-third of the school’s operations through investment-generated revenue. Consistently achieving this goal allows the university to limit its reliance on tuition for the cost of operations as well as other expenses like staff salaries. The success of Yale’s investments is noteworthy because their managers have attained this goal year after year with just 17% of their portfolio being held in the stock market.
Against the Status Quo
The attitude of Yale’s endowment strays from traditional notions of investing, and as their investments have proven over time, this approach can result in great success. What this means in terms of investing is that, rather than opting for traditional assets, Yale’s endowment has instead prioritized non-traditional assets and has embraced very broad portfolio diversification. The primary reason behind this approach stems from a desire to achieve returns from a variety of different asset classes and at the same time, lower the overall risk profile of their portfolio. A strategy that makes sense for just about every investor
While Yale’s endowment is a multi-billion dollar portfolio, its practices and overall strategies are still applicable to individual investors even though some of the investments they make are designed for an institutional buyer. At the core of Yale’s investment practice is a simple understanding that applies to all investors When it comes to investing, diversification, using non-correlated assets and taking measured risks and taking a long term view can increase your odds greatly for financial success. Being able to recognize profitable opportunities, effectively navigate risk, and manage a diversified portfolio are all key parts of Yale’s historically successful investment practice. Adopting these attitudes and approaches to individual investment portfolios could help investors generate more income and better prepare for a financially-secure future.
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