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Using ETFs to Build Your All-Weather Portfolio Easily

Posted in All-Weather Portfolio

Build a Balanced, Worry-Free Portfolio With Just a Few Clicks


If you’ve ever worried about the ups and downs of the stock market—or wanted a portfolio that can thrive in anyeconomic climate—you’re not alone.

That’s exactly why billionaire investor Ray Dalio created the All-Weather Portfolio: a simple, diversified investment strategy designed to perform reasonably well in all types of markets—whether inflation is rising, the economy is booming, or a recession hits.

The good news? You don’t need to be a hedge fund manager to use this approach.

With just a few low-cost ETFs, you can build your very own All-Weather Portfolio and enjoy peace of mind knowing you’re well-diversified and protected from surprises.


What Is the All-Weather Portfolio?

The All-Weather Portfolio was designed by Ray Dalio, founder of Bridgewater Associates—one of the largest hedge funds in the world. It’s based on the idea that there are four basic economic environments:

  1. Rising growth
  2. Falling growth
  3. Rising inflation
  4. Falling inflation

Dalio’s strategy aims to balance these environments by allocating to asset classes that perform well in each one. It’s not about predicting the future—it’s about being prepared no matter what the future holds.


The Classic All-Weather Portfolio Allocation

Here’s the basic breakdown of Ray Dalio’s original All-Weather Portfolio:

  • 30% U.S. Stocks (for growth)
  • 40% Long-Term Treasury Bonds (for deflation protection)
  • 15% Intermediate-Term Treasury Bonds (for stability)
  • 7.5% Gold (for inflation)
  • 7.5% Broad Commodities (also for inflation)

The goal? Balance. This mix is meant to do reasonably well across bull markets, bear markets, inflationary shocks, and economic slowdowns.


Build Your Own All-Weather Portfolio Using ETFs

You don’t need to hire a hedge fund or pay high fees to implement this strategy. In fact, you can build a complete All-Weather Portfolio using low-cost ETFs that are easy to buy through any brokerage.

Here’s how to replicate it:


🟦 30% U.S. Stocks

ETF Option: [VTI] Vanguard Total Stock Market ETF
Why it works: Provides broad exposure to thousands of U.S. companies, from large-cap to small-cap. It’s your main engine for long-term growth during booming economic times.


🟦 40% Long-Term Treasury Bonds

ETF Option: [TLT] iShares 20+ Year Treasury Bond ETF
Why it works: These bonds tend to rise when inflation falls or during economic slowdowns. Great for counterbalancing the risk of stocks.


🟦 15% Intermediate-Term Treasury Bonds

ETF Option: [IEF] iShares 7-10 Year Treasury Bond ETF
Why it works: Adds balance and stability to your bond exposure. Less volatile than long bonds but still a good hedge against deflation or falling interest rates.


🟨 7.5% Gold

ETF Option: [GLD] SPDR Gold Shares
Why it works: Gold has historically been a safe haven during inflation and times of crisis. It helps protect your purchasing power when the dollar weakens.


🟫 7.5% Commodities

ETF Option: [DBC] Invesco DB Commodity Index Tracking Fund
Why it works: Offers exposure to a broad range of commodities like oil, gas, metals, and agricultural products. Commodities often do well during inflationary periods.


Example Allocation Using ETFs

Asset ClassAllocationETF Example
U.S. Stocks30%VTI
Long-Term Bonds40%TLT
Intermediate Bonds15%IEF
Gold7.5%GLD
Commodities7.5%DBC

With these five ETFs, you’ve built a portfolio designed to weather any economic storm—from a booming bull market to a 1970s-style inflation spike.


Why Retirees and Conservative Investors Love It

The All-Weather Portfolio is ideal for retirees and conservative investors because:

  • It limits big drawdowns (less emotional stress)
  • It’s highly diversified across asset classes
  • It performs well across a variety of market conditions
  • It doesn’t require constant trading or market timing

While it may not have the highest returns in a booming market, it also doesn’t crash as hard during a downturn. That makes it a solid “sleep well at night” strategy.


Tips to Keep in Mind

✅ Rebalance annually. Over time, some ETFs will grow faster than others. Rebalancing brings your portfolio back to the target allocation and locks in gains.

✅ Use low-cost ETFs. The ETFs listed above all have low expense ratios. Keeping costs low means more money stays in your pocket.

✅ Add international exposure (optional). If you want more global diversification, you can swap some of your U.S. stock exposure for a fund like VXUS (Vanguard Total International Stock ETF).

✅ Customize if needed. If 40% in long bonds feels like too much for your risk tolerance, you can slightly adjust the mix—but try to keep the diversification philosophy intact.


Real-Life Example: Susan’s Retirement Portfolio

Susan, age 67, wanted a simple portfolio she wouldn’t have to babysit. She was tired of market drama and didn’t want to guess what would happen next.

She built a version of the All-Weather Portfolio using:

  • 30% VTI
  • 40% TLT
  • 15% IEF
  • 7.5% GLD
  • 7.5% DBC

Now she spends less time worrying and more time enjoying retirement. Even when the market dips, her portfolio stays balanced—and her income stays steady.


Final Thoughts: One Portfolio. Any Weather.

You don’t need a financial guru or expensive hedge fund to protect your savings. With just a handful of well-chosen ETFs, you can build a portfolio that’s:

  • Simple
  • Diversified
  • Resilient
  • Easy to manage
  • Built to last through thick and thin

Ray Dalio’s All-Weather approach takes the guesswork out of investing. And thanks to ETFs, anyone can put it into action.

If you’re ready to get off the roller-coaster and into a balanced, peaceful retirement portfolio, this strategy is a great place to start.


Disclaimer: This article is for informational purposes only and is not financial advice. Investing involves risks, including the risk of loss. Past performance does not guarantee future results. Always consult a licensed financial advisor before making investment decisions.