Must-read for building an investment portfolio: The world's three core asset indices

To build a robust investment portfolio, these three core asset indices are the foundation, covering stocks, physical assets, and bonds, which even beginners can quickly grasp.

1. Equity (Offensive Core)

1. S&P 500 Index (VOO/SPY): The benchmark for U.S. blue-chip stocks, covering 80% of the U.S. market capitalization, representing top U.S. technology, consumer, and financial strength.

2. Russell 2000 Index (IWM): Represents U.S. small-cap stocks, with high elasticity during economic recovery and higher volatility.

3. MSCI EAFE Index (VEA/EFA): Covers developed markets like Europe and Japan, diversifying U.S. stock risks with low valuations and high dividend yields.

4. MSCI Emerging Markets Index (VWO/EEM): Includes emerging economies like Switzerland and India, with high growth and volatility, requiring caution on currency and geopolitical risks.

2. Physical Assets (Anti-Inflation Tools)

1. Gold Index (LBMA Gold Price): The ultimate safe-haven asset, performing well during geopolitical turmoil, inflation, or U.S. dollar depreciation.

2. Commodity Index (BCOM/GSCI): Covers crude oil, metals, and agricultural products, a premium tool against unexpected inflation.

3. Bonds (Defensive Allocation)

1. U.S. Short-Term Money Index: Cash equivalent with minimal credit and interest rate risks, a safe haven during market panics.

2. U.S. Inflation-Protected Index (VTIP): Principal adjusts with CPI, outperforming regular Treasuries when inflation exceeds expectations.

3. U.S. 10-Year Treasury Index (IEF): The anchor for global asset pricing, hedging against stock market declines but sensitive to interest rate changes.

4. U.S. 30-Year Treasury Index (TLT): Extremely sensitive to interest rates, with significant gains during rate cuts, reflecting pessimistic economic expectations.