Building an investment game plan is a key part of building lasting wealth. Without one person, you may accumulate much less in your life. Now that the S&P 500 is corrected 20% in 2025, we have officially entered another bear market. Anyone is guessing whether this recession continues and how long it lasts.
One of the reasons why I fixed the post How do I invest $250,000 in cash today It’s because I keep getting this problem. The amount does not have to be $250,000 in cash, but any amount. This is my real-time roadmap and a way to align with thoughts and actions, especially during turbulent times.
After getting back to back to back 20% in the S&P 500 for 2023 and 2024, I don’t want to give back to my 2021 earnings as much as I did in 2022. Let’s revisit the investment game plan and see where I can improve and now adjust the stock market has fallen.
This is not an investment advice for you, as we are in a different financial position. This is how I think about how to manage my own money in a bear market. Please make your own investment decisions that suit your goals.
Review of my investment game plan in a bear market
For background, I have been investing since 1996 and have experienced the Asian financial crisis of 1997, the Dot-Com Bust in 2000 and the Global Financial Crisis of 2008, which invested more than $1.5 million. During the 2008 crash, I lost 35% – 40% of my net worth in six months. I never want to go through this experience again, especially now that I have a family to support.
Our top goals in a bear market: Keep DUP, representing Dual unemployed parentsS, not Dinks or Henrys. My wife and I share the goal of not having to work for anyone anymore. We can’t go back at our age. At the moment, what we value most is leaving home at the age of 18 and having the time and energy to spend with our children (8 and 5 years old) with our children.
After a whole day of work, we didn’t want to be exhausted. Instead of escaping work and family on the weekend, we want to spend the whole weekend together. During school breaks, our goal is to travel as a family for longer periods of time. As older parents, we no longer have as much energy as ordinary young parents. Going back to work will completely drain our battery.
As a medium-risk investor, this is our investment game program designed to maintain our freedom using the investments and passive income we have established. Given that my wife and I don’t have a stable salary, our main goal is to survive in the bear market until the better times come back. At this stage of life, we cannot lose more than 40% of our net worth.
1) Treasury bills (30% of cash holdings -> down to 20%)
Bond yields fell from 5% to around 4.25%, and bonds were less attractive than 5%. Nevertheless, in the stock market, earning about 4% of the risk-free beat lost over 20%. So if you looked down on Treasury bonds before, it’s time to rethink. The goal is not to generate huge returns, but to protect you from downside risks of more volatile assets.
If you are within the high marginal federal income tax scope, Treasury bills offer an additional boost because the interest earned is state tax-free. In a bear market, I always want to have at least six months of cash living expenses. Cash not only provides psychological comfort, it also allows you to invest in value opportunities.
In view of recent stock market corrections, I have reduced this bond deployment allocation from 30% to 20%.
2) Stocks (25% of cash holdings -> up to 35%)
I enter 2025 with caution, with the S&P 500’s avant-garde P/E ratio of about 22 times, 18 times higher than the historical average. After two years of bombshell, some mean return seems inevitable.
At that time, I wrote: “Given the expensive valuation, I can only buy in a $1,000-$5,000 division, down every 0.5%-1%. The S&P 500 index may drop to 5,000 if the valuation means recovery.” I stick to this plan and start buying after a 3% drop…but now the index is down a lot, with the S&P 500 falling from the expected 5,500 floor to a low of -4,850.
Unfortunately, I am no Be cautious or patient. I’ve been buying dips and the market has been declining. That said, I’ve been buying dipping sauce for over 26 years and in the long run, it’s solved. The worst situation is always felt in the short term. The latest correction reiterates why I prefer stable returns in real estate over cumbersome volatility in stocks.
Given the callback, I upgraded the stock allocation from 25% to 35%. Now there seems to be a decent probability that the S&P 500 index can be corrected to 4,500, or a multiple of 18 below the P/E multiple of 18 for the long-term forward. Why pay the average valuation when the government purposefully sacrifices potentially lower interest rates in the stock market?
3) Venture Capital (20% of cash holdings → Increased to 25%)
Investing in venture capital has been a good move so far. I want to get in touch with private AI companies because I expect our kids to be challenging. I also value the ability to invest in companies that I think perform well and be ready to improve their next capital at a higher valuation. This type of arbitrage and transparency is why I like open-end venture funds.
Openai recently closed a new $40 billion round of funding, valuing the company at $300 billion, less than 10 months ago. This momentum is also good for other private AI companies, which may also be raised at higher valuations, although there is no guarantee.
In hindsight, the way I should allocate for venture capital is more than just 20%. Nevertheless, with the turbulent public markets, we will see IPO delays (e.g., Krana) and valuation escalation. As a result, venture capitalists must maintain discipline and avoid paying.
Below is mine Fundraising Venture Capital Dashboard. The returns throughout the year have been stable, making me wish my distribution was greater. But my current liquidity is limited and I believe in maintaining diversity. Once the rental property is sold, I plan to increase the allocation.
Currently, I upgrade my venture capital allocation from 20% to 25%. There may be More volatility under the surface. But spiritually, it’s nice to not see it. Hopefully, given that the private market has already stood out from the public market, the private market will have a better valuation.
4) Real estate (24.9% of cash holdings)
2025 is shaping real estate to shine significantly and potentially surpass stocks. I’ve been waiting for this moment since 2022 as the Fed caught up 11 times in record time. Now, amid all the uncertainty and chaos, expectation is back Three to five Starting from 2025, it will drop from zero to two from the beginning of the year.
Penalized demand, a decline in mortgage rates (now on average about 6.5%), and capital that spins out of interesting currency stocks and turns to tangible assets are laying the foundation for the continued strength of many real estate markets. That is, like Austin, Dallas, Punta Golda and Cape Coral, the market thrives and provides plenty of room for building new supplies.
The gap between the S&P 500 and the price of single-family housing in the United States is large and may be unsustainable. Real estate prices should catch up when the S&P 500 is corrected. If the government will purposely collapse the stock market, it should do everything it can to support the real estate market, where about 66% of Americans own homes.
Real estate corpses are very good
Here’s a main story: Rocket Mortgage’s owner, formerly Quicken Loans, just agreed to acquire mortgage services giant Mr. Cooper for $9.4 billion. This is their $1.75 billion acquisition of Redfin. You won’t spend that money unless you’re optimistic about the rebound in real estate and mortgages.
I’m happy with the 24.9% distribution of real estate, because I’ve been exposed in a lot – about 50% of my net worth is related to real estate. Earlier this year, I spoke with fundraising CEO Ben Miller and we both agreed Residential Commercial Real Estate Due to its relatively low valuation, it is one of the most attractive asset classes today.
Facing the decision to invest at a 20–30% discount from the March 2022 high. In a moderate recession, real estate should be significantly better than stocks.
5) Financial education (accounting for 0.1% of cash holdings)
Since I allocate 0% to debt repayment, as most of us refinance the mortgage and (hopefully) don’t bear the revolving credit card balance, the final category of allocating mine to me 100% is financial education.
I firmly believe that financial education is the key to building lasting wealth. That’s why I majored in economics at William & Mary and received my MBA from Berkeley Financial Warriorcontinue writing the book. A basic understanding of asset allocation, risk and return, tax strategies, and various ways to grow wealth is of great value.
Unfortunately, most people no longer spend time reading articles (reading books separately) and are no longer personal finance. I saw my latest April Fools’ Day post and subsequent comments lacked careful reading! As a result, they are often blindly blinded in bear markets.
I have repeatedly witnessed this cycle of financial destruction since I started working in finance in 1999. People allocate risky assets or profit margins before a massive crash. Others panic sells near the bottom and keeps cash unreasonable for time. Once you lag behind during a recession, it’s hard to catch up with your peers.
Spend only 0.1% in $250-$250 for $250 Buy this, not or Millionaire milestone Negligible in grand plans. But the potential return on this investment could be thousands.
Sadly, people end up taking action often leads to significant economic losses. This was the case for me during the global financial crisis of 2008-2009, which eventually prompted me to initiate Financial Warrior.
Please make your own investment game plan
If you don’t plan to invest in games, you may accumulate much less wealth than your peers. Worse, you may lose a large amount of net worth due to exposure and misallocation.
Establish your financial goals and then create a plan to get there. If you are not sure where to start, consider working with a financial advisor or financial professional of some kind. Or, if you have the ability and want more hands-on attention, then a wealth manager has the option. Just prepare to charge a fee based on a certain proportion of assets and prepare to pay.
For many people, in their personal finance. Ten years later, those who often wonder where all the money went.
Reader, how do you deploy cash in this bear market? Are you adjusting your investment strategy? How much do you think the market will go down and why? Are you financially prepared for a 1-2 year downturn?
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