Ray Dalio All Weather Portfolio: How to Build It in 2026
Complete guide to Ray Dalio's All Weather Portfolio allocation, including gold's role, and how to implement this strategy in your retirement accounts.
Key Takeaways
- 1All Weather Portfolio designed to perform in any economic environment
- 2Allocation: 40% long-term bonds, 30% stocks, 15% intermediate bonds, 7.5% gold, 7.5% commodities
- 3Gold serves as protection against inflation and crisis
- 4Lower returns than all-stock but much lower volatility
- 5Ideal for retirees who can't afford big drawdowns
- 6Can be implemented with low-cost ETFs or in IRA
- 7Rebalance annually to maintain allocations
What Is the All Weather Portfolio?
The All Weather Portfolio was created by Ray Dalio, founder of Bridgewater Associates (world's largest hedge fund). It's designed to perform reasonably well in all economic "seasons" - growth, recession, inflation, and deflation.
- Created by one of the world's most successful investors
- Designed for stability, not maximum returns
- Reduces drawdowns during market crashes
- Performs in both inflationary and deflationary periods
- Ideal for retirement portfolios where preservation matters
Dalio's Philosophy
"Risk parity" means balancing the risk contribution from each asset class, not just the dollar amounts. That's why bonds get a larger allocation—they're less volatile.
The All Weather Allocation
Here's the classic All Weather Portfolio allocation:
| Asset Class | Allocation | Purpose |
|---|---|---|
| Long-Term Bonds (20+ yr) | 40% | Growth, deflation protection |
| U.S. Stocks | 30% | Growth during expansion |
| Intermediate Bonds (7-10 yr) | 15% | Stability, income |
| Gold | 7.5% | Inflation hedge, crisis protection |
| Commodities | 7.5% | Inflation protection |
Total: 100%
The heavy bond allocation (55%) provides stability. Gold and commodities (15%) provide inflation protection. Stocks (30%) provide growth.
Why This Allocation Works
The portfolio is designed around four economic "seasons" that affect assets differently.
- Always has some assets suited to current conditions
- No attempt to predict which season is coming
- Risk is balanced across scenarios
- Smooths returns over market cycles
| Economic Season | What Helps | All Weather Response |
|---|---|---|
| Growth Rising | Stocks, Commodities | 37.5% allocated |
| Growth Falling | Bonds, Gold | 62.5% allocated |
| Inflation Rising | Gold, Commodities, TIPS | 15%+ allocated |
| Inflation Falling | Stocks, Bonds | 85% allocated |
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Gold's Role in All Weather
Gold serves a specific purpose in the All Weather Portfolio—it's not just another investment.
- **Inflation Protection**: Gold rises when purchasing power falls
- **Crisis Insurance**: Gold often rises during market crashes
- **Currency Hedge**: Protects against dollar weakness
- **Non-Correlated**: Moves differently than stocks and bonds
- **Store of Value**: Maintains purchasing power long-term
Why 7.5%?
This allocation provides meaningful protection without over-concentrating in a non-yielding asset. Combined with 7.5% commodities, you have 15% inflation protection.
How to Implement All Weather
You can build this portfolio with low-cost ETFs.
| Asset Class | Allocation | Example ETF | Expense Ratio |
|---|---|---|---|
| Long-Term Bonds | 40% | TLT (iShares 20+ Year Treasury) | 0.15% |
| U.S. Stocks | 30% | VTI (Vanguard Total Stock) | 0.03% |
| Intermediate Bonds | 15% | IEF (iShares 7-10 Year Treasury) | 0.15% |
| Gold | 7.5% | GLD or Physical Gold IRA | 0.40% |
| Commodities | 7.5% | DJP or GSG | 0.75% |
For Physical Gold
ETFs like GLD hold paper gold. For true All Weather protection, consider physical gold in a Gold IRA which eliminates counterparty risk.
Historical Performance
How has All Weather performed historically?
| Metric | All Weather | S&P 500 | Advantage |
|---|---|---|---|
| Avg Annual Return | ~7% | ~10% | S&P higher |
| Max Drawdown | ~12% | ~55% | All Weather safer |
| Worst Year | ~-3% | ~-37% | All Weather safer |
| Volatility | Low | High | All Weather calmer |
The Trade-Off
All Weather sacrifices some return for much lower volatility. In retirement, avoiding a 50% drawdown may be worth giving up a few percentage points of return.
Adding Gold to Your Portfolio
If you want to implement the All Weather gold allocation with physical gold (rather than paper ETFs), a Gold IRA allows you to hold real gold bullion in a tax-advantaged retirement account.
Implementing All Weather's Gold Allocation
For true crisis protection, consider physical gold instead of paper ETFs. A Gold IRA lets you hold real bullion in your retirement portfolio.
- Physical gold eliminates counterparty risk
- Tax-advantaged structure in your IRA
- Follows Dalio's allocation principles
Frequently Asked Questions
1What is the Ray Dalio All Weather Portfolio allocation?
40% long-term bonds, 30% stocks, 15% intermediate bonds, 7.5% gold, and 7.5% commodities. This allocation is designed to perform in all economic conditions—growth, recession, inflation, and deflation.
2Why does Ray Dalio recommend gold?
Gold serves as inflation protection, crisis insurance, and a currency hedge in the All Weather Portfolio. At 7.5% allocation, it provides meaningful protection without over-concentrating in a non-yielding asset.
3Is All Weather Portfolio good for retirement?
Yes, it's well-suited for retirees because it prioritizes stability over maximum returns. The lower drawdowns mean you're less likely to be forced to sell at the worst times.
4How does All Weather perform compared to stocks?
All Weather typically returns 6-8% annually vs. 10% for stocks, but with much lower volatility. The worst year is typically around -3% vs. -37% for stocks. In retirement, the stability may be worth the lower return.
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