The translation of "Le secret des patrimoines résilients" from French to English is "The secret of resilient heritages".

I've met a bunch of private bankers and wealth managers. At first glance, they seem to be experts ready to build you the perfect portfolio. But the truth is, their expertise is mostly in selling financial products: PEA, Life Insurance, Livret A… accompanied by well-rehearsed speeches. Ask them for details on the distribution of the underlying assets and risk optimization, and you'll quickly see the limits of their expertise.

Their mission? Selling. They are less interested in building a balanced portfolio, well suited to your needs.

Take Control of Your Wealth

This chapter talks about taking back the reins of your wealth. Because at the end of the day, no one — neither your banker nor your advisor — will ever care about your money as much as you do.

Let's be clear: this chapter is not for everyone. If you live day-to-day or if you don’t have at least six months of savings set aside in a safe account — like a Livret A or a similar account — focus first on building this safety cushion. Security comes before strategy.

But if you've moved past this stage — if you have your emergency fund covered and a bit of extra money lying around — then this chapter is for you. It's time to move from saving to performance, from defense to offense.

You made the effort to save. Now, let's make that money work for you.

Envelopes vs. Underlying Assets: Make the Distinction

Here's the mistake many people make: confusing the envelope with its contents. Think of envelopes like PEA, Livret A, or a Securities Account — these are containers. These fiscal envelopes or legal structures contain your investments, offering benefits like tax advantages or liquidity. But they don't generate returns themselves. The real driver? The underlying assets — stocks, bonds, real estate, or others.

These assets are what grow (or shrink) your wealth, not the envelope itself. It's what's inside that counts. A nice envelope will never compensate for poor content. Asset allocation makes all the difference — not the envelope.

Why Asset Allocation is Crucial

Asset allocation is your safety net. It's not about guessing what the market will do tomorrow — it's about being prepared for all eventualities. By spreading your money across stocks, bonds, real estate, and cash, you're building a portfolio ready to handle both sunny days and storms.

Why is this so important? Because no one can predict the future. Stocks may soar one year and crash the next. Bonds may seem boring — until they save the day during a recession. Cash doesn’t produce big returns, but it's your lifeline when you need money immediately. Real estate, meanwhile, is the slow and steady builder that adds stability over time.

What's great about asset allocation is its simplicity. You don't need to follow the market daily or pick the best companies. You just need balance: stocks for growth, bonds for stability, cash for emergencies, real estate to diversify. Gold to protect against inflation, and private equity for aiming at high returns (with high risks). The right mix depends on your goals and time horizon.

A well-balanced portfolio protects you from extremes and keeps you on track with your goals — no matter the headlines. The key is to start with a plan that lasts. That's the power of balance.

Types of Assets: A Quick Overview

Stocks - The Growth Engine

When you buy a stock, you take a small part of a company. Stocks have the highest growth potential but also the greatest volatility. They are your long-term engine — think in decades, not days.

Bonds - The Stabilizer

Bonds are loans you give to governments or companies. In return, you receive interest. They are stable, reliable, and provide a balance to the wild swings in stocks.

Real Estate - The Solid Pillar

From rental properties to REITs (real estate investment trusts), real estate provides income and long-term growth. It's not fast, but it's less affected by market turbulence.

Private Equity - The Secret Card

Private equity allows you to hold a stake in companies that are not listed on the stock market. This includes startups and developing companies. The potential is huge, but the money is often locked in for years. High risk, high reward — it's not for the impatient.

Commodities - The Essentials

Gold, oil, natural gas, coffee — commodities are essential elements of the economy. They protect against inflation and are an excellent tool for diversification. But they do not generate regular income, and their prices can be unpredictable.

Crypto - The Digital Maverick

Bitcoin, Ethereum, and other cryptos are reinventing currency. Crypto is volatile, speculative, and not for the faint-hearted. But for those willing to take calculated risks, returns can be impressive. Remember: it's a gamble, not a foundation.

Alternatives - The Portfolio Wildcards

Think of collectibles or hedge funds. High risk, high reward, and often misunderstood. To be used sparingly — they are the spices, not the main dish.

Cash and Equivalents - The Safety Net

This includes savings accounts, money market funds, or anything else highly liquid. It doesn’t grow much, but it's your safety net when opportunities or emergencies arise.

Why Balance Assets?

Here's the principle: Divide your money among different types of assets — stocks, bonds, real estate, and cash. Each has its role.

Why balance? Because markets are unpredictable. Stocks can skyrocket, then crash. Bonds may seem dull — until they save the day during a crash. By spreading your assets, you're ready for anything.

Modern Portfolio Theory (MPT)

Welcome to the MPT system (Modern portfolio theory). Think of it like the 80/20 rule applied to your finances — the goal isn't to find a magic formula but to create a system that works no matter the market conditions. Invented in the 1950s by Harry Markowitz, this approach is revolutionary for reducing risks while maximizing performance.

What Does Research Say?

Diversification isn't just a trendy word — it's science. MPT explains that by combining different asset classes (stocks, bonds, real estate, etc.), you can reduce risk without sacrificing return. Why? Because everything doesn't move in the same way. Stocks can crash, but bonds can remain stable. Real estate can slow down, but commodities can gain value. The idea is to combine assets that are not correlated, like forming a team where each member plays a unique and essential role.

The Efficient Frontier: Finding Your Sweet Spot

Imagine a graph. On one axis: risk. On the other: return. The efficient frontier is the curve showing the best possible return for a given risk. If your portfolio is on this curve, congratulations — you're getting the best return for your risk. Below? You're playing it too safe and leaving money on the table. Above? Sorry, that's not possible.

Your goal is to find your spot on this curve. Not someone else's. Yours. If you're willing to take risks, aim for growth. If you prefer to sleep well at night, prioritize safety. In both cases, you're optimizing your situation, instead of leaving it to chance.

Why This Matters

MPT isn't about predicting the market — it's about protecting your portfolio against yourself. Emotions destroy most portfolios, much more than market crashes do. Diversification and the efficient frontier are your antidote. They allow you to stay balanced, stable, and focused on the long term.

Think of this as the recipe for financial resilience. You don't need to know what will happen — you just need a plan that works no matter what. That's the beauty of MPT. It's science. It's strategy. And it works.

Passive Investing

This is the simplest and most effective strategy for most people. Passive investing is exactly what it sounds like. You pick a mix of investments that match your goals, set it up, and let it be.

Here’s how it works: set percentages for each asset class — for example, 60% stocks, 30% bonds, 10% cash. Once the plan is in place, you don’t touch it with each market fluctuation. You simply rebalance occasionally to return to the initial proportions. And that’s it.

Why does it work? Because it removes emotion from the equation. No panic sales when the market drops. No chasing the latest trend. It’s disciplined, it might be boring, but it’s also what works. Studies show it outperforms most investors who try to beat the market continuously.

This approach is perfect for those who prefer consistency over complexity. It doesn’t promise overnight riches, but it promises steady progress toward your goals. Set your allocation, automate when possible, and focus on your life. Sometimes, the simplest solution is the best.

Practical Steps to Create Your Asset Allocation

Step 1: Define Your Goals and Risk Tolerance

Goals

Clearly define how much money you will need (X) in a certain timeframe (Y years) for a specific goal (Z).

This helps you compartmentalize your finances, each compartment aligned with a specific goal.

Example:

Compartment #1: Immediate needs, accessible at any time.
Compartment #2: Saving to buy a house in 5 years.
Compartment #3: Retirement in 20 years.

Risk Tolerance

Determine how much loss you're willing to endure in a year without panicking.

Example:

Compartment #1: 0% risk tolerance (guaranteed capital)
Compartment #2: 5% risk tolerance (moderate risk)
Compartment #3: 40% risk tolerance (higher risk for long-term growth)

Step 2: Choose Your Allocation for Each Compartment

There are two approaches: do-it-yourself (DIY) or portfolio models. DIY involves understanding the correlation between assets and variance (a measure of risk). You can experiment with historical data to find the ideal combination.

To be honest, DIY is difficult. Even I, after hours of analysis, preferred to rely on experts. Fortunately, there are already reliable models available. I recommend the site Portfolio charts (

https://portfoliocharts.com/

) which documents these portfolio types very well.

I advise starting with either a 60-40 portfolio (popularized by John Bogle, the founder of Vanguard and the first ETFs) or an "All seasons" (created by Ray Dalio, the manager of Bridgewater Associates, the largest Hedge Fund in the world).

Step 3: Setup and Monitoring

Choosing the Right Funds or ETFs

Opt for low-cost options (expense ratios below 0.2%).
Choose ETFs or index funds for instant diversification.
Align your choices with your allocation plan.

Regular Rebalancing

Bring your portfolio back to its target allocation once or twice a year.
Use thresholds (for example, adjust if an asset class deviates by more than 5%).
Automate with platforms or robo-advisors if possible.

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