view of spiral interior

Getting in balance

Find out how we think investors can protect and grow their wealth for the year and decade ahead.

A new world will mean complexity and volatility, but also opportunity to grow wealth. To navigate this new world effectively, investors can build a plan using the Liquidity. Longevity. Legacy.* framework, get in balance through a globally diversified multi-asset portfolio, and stay disciplined yet agile by complementing their long-term portfolio with tactical trade ideas.

Liquidity. Longevity. Legacy.

The Liquidity. Longevity. Legacy. or 3L approach is designed to help investors explore and pursue their wealth goals over different time frames, and involves segmenting wealth into three strategies:

To help provide cash flow for short-term expenses

This strategy is to ensure investors have enough liquid assets to meet their short-term spending needs and is typically invested in cash or cash-like securities. With interest rates likely to fall in the year and years ahead, we recommend limiting this portion to two to five years of expected portfolio withdrawals and taking action now to optimize yields using certificates of deposit, bond ladders, or structured solutions.

For longer-term needs

This strategy is about investing in assets that can provide income over the course of an investor’s lifetime. Amid heightened uncertainty in our new world, we believe this strategy is best invested in a well-diversified global portfolio, balancing return requirements with risk management, and complemented with many of the tactical ideas discussed in this Year Ahead.

For needs that go beyond your own

This strategy is about investing for needs that go beyond an investor’s own lifetime and potentially maximizing the value of assets for inheritance or philanthropy. Many of the ideas discussed in the Decade Ahead may be suitable for this strategy, including leaders from disruption and private markets. Impact investing, sustainable investing, and philanthropy can also be appropriate for Legacy strategies.

To help provide cash flow for short-term expenses

This strategy is to ensure investors have enough liquid assets to meet their short-term spending needs and is typically invested in cash or cash-like securities. With interest rates likely to fall in the year and years ahead, we recommend limiting this portion to two to five years of expected portfolio withdrawals and taking action now to optimize yields using certificates of deposit, bond ladders, or structured solutions.

For longer-term needs

This strategy is about investing in assets that can provide income over the course of an investor’s lifetime. Amid heightened uncertainty in our new world, we believe this strategy is best invested in a well-diversified global portfolio, balancing return requirements with risk management, and complemented with many of the tactical ideas discussed in this Year Ahead.

For needs that go beyond your own

This strategy is about investing for needs that go beyond an investor’s own lifetime and potentially maximizing the value of assets for inheritance or philanthropy. Many of the ideas discussed in the Decade Ahead may be suitable for this strategy, including leaders from disruption and private markets. Impact investing, sustainable investing, and philanthropy can also be appropriate for Legacy strategies.

To help provide cash flow for short-term expenses

This strategy is to ensure investors have enough liquid assets to meet their short-term spending needs and is typically invested in cash or cash-like securities. With interest rates likely to fall in the year and years ahead, we recommend limiting this portion to two to five years of expected portfolio withdrawals and taking action now to optimize yields using certificates of deposit, bond ladders, or structured solutions.

For longer-term needs

This strategy is about investing in assets that can provide income over the course of an investor’s lifetime. Amid heightened uncertainty in our new world, we believe this strategy is best invested in a well-diversified global portfolio, balancing return requirements with risk management, and complemented with many of the tactical ideas discussed in this Year Ahead.

For needs that go beyond your own

This strategy is about investing for needs that go beyond an investor’s own lifetime and potentially maximizing the value of assets for inheritance or philanthropy. Many of the ideas discussed in the Decade Ahead may be suitable for this strategy, including leaders from disruption and private markets. Impact investing, sustainable investing, and philanthropy can also be appropriate for Legacy strategies.

To help provide cash flow for short-term expenses

This strategy is to ensure investors have enough liquid assets to meet their short-term spending needs and is typically invested in cash or cash-like securities. With interest rates likely to fall in the year and years ahead, we recommend limiting this portion to two to five years of expected portfolio withdrawals and taking action now to optimize yields using certificates of deposit, bond ladders, or structured solutions.

For longer-term needs

This strategy is about investing in assets that can provide income over the course of an investor’s lifetime. Amid heightened uncertainty in our new world, we believe this strategy is best invested in a well-diversified global portfolio, balancing return requirements with risk management, and complemented with many of the tactical ideas discussed in this Year Ahead.

For needs that go beyond your own

This strategy is about investing for needs that go beyond an investor’s own lifetime and potentially maximizing the value of assets for inheritance or philanthropy. Many of the ideas discussed in the Decade Ahead may be suitable for this strategy, including leaders from disruption and private markets. Impact investing, sustainable investing, and philanthropy can also be appropriate for Legacy strategies.

To help provide cash flow for short-term expenses

This strategy is to ensure investors have enough liquid assets to meet their short-term spending needs and is typically invested in cash or cash-like securities. With interest rates likely to fall in the year and years ahead, we recommend limiting this portion to two to five years of expected portfolio withdrawals and taking action now to optimize yields using certificates of deposit, bond ladders, or structured solutions.

For longer-term needs

This strategy is about investing in assets that can provide income over the course of an investor’s lifetime. Amid heightened uncertainty in our new world, we believe this strategy is best invested in a well-diversified global portfolio, balancing return requirements with risk management, and complemented with many of the tactical ideas discussed in this Year Ahead.

For needs that go beyond your own

This strategy is about investing for needs that go beyond an investor’s own lifetime and potentially maximizing the value of assets for inheritance or philanthropy. Many of the ideas discussed in the Decade Ahead may be suitable for this strategy, including leaders from disruption and private markets. Impact investing, sustainable investing, and philanthropy can also be appropriate for Legacy strategies.

Investors can get started with the 3L approach by first considering how much they need to draw from their portfolios to meet their spending needs over the next two to five years; their spending plans for the next five years and beyond; and how much they intend to leave behind.

Mapping these sums into the Liquidity. Longevity. Legacy. investment strategies, in consultation with an advisor, can help investors clarify why they are investing and therefore boost their chances of achieving their goals. The Liquidity strategy can offer investors peace of mind during periods of market volatility, and a disciplined process of drawing on, and then refilling the strategy during bear markets can help generate meaningful outperformance over time.

* Time frames may vary. Strategies are subject to individual client goals, objectives and suitability. This approach is not a promise or guarantee that wealth, or any financial results, can or will be achieved.

Get in balance

We believe that holding a core position in a balanced portfolio is the most effective way for investors to both protect and grow wealth over time. The concept of a balanced portfolio is rooted in the principle of diversification, spreading investments across a variety of assets to earn returns and manage risks.

Diversification is often thought of as being about risk reduction, and it is: Spreading investments broadly can allow investors to earn equivalent returns with lower risk than they would be able to take on in individual investments.

But it is important to remember that diversification is at least as much about not missing the right stocks as it is about avoiding overexposure to the wrong ones. For example, we know that picking future performance is hard: A study by Arizona State University professor Hendrik Bessembinder showed that just 0.3% of firms accounted for half of US stock market wealth creation between 1926 and 2019. Diversification is the only way investors can make sure they do not miss those very few outperformers—particularly important in an era of change.

Building a clear financial plan, thinking about required rates of return, and understanding one’s tolerance for volatility and risk is a way to get started. Balanced portfolios can be built to cater for a range of risk tolerances and return objectives, and we also think investors with sustainability-related objectives can earn comparable risk-adjusted financial returns to traditional portfolios with a sustainable balanced portfolio.

There is never a bad time to invest in a balanced portfolio, but given our positive outlook for broad equity and bond markets and alternatives over the next year, as well as the potential for equities and bonds to effectively diversify each other in our key risk scenarios, we believe now is a good time for investors to get in balance.

Positive returns expected across asset classes
December 2024 total return expectations for select asset classes

  • 0 %

    S&P 500

  • 0 %

    10-year US Treasuries

  • 0 %

    USD cash

Source: UBS, as of November 2023

Other chapters

Chapter 1 The Year Ahead

Discover our scenarios, key questions, and forecasts for 2024, plus take a look back at 2023.

Chapter 2 The Decade Ahead

Dive into the “Five Ds,” scenarios and key questions for the future, and our asset class expectations.

Chapter 3 Top investment ideas

Explore our Messages in Focus to learn about how we think you can add value to your portfolio.

Already a client of UBS?

Want to print this report?

This report has been prepared by UBS AG, UBS AG London Branch, UBS Switzerland AG, UBS Financial Services Inc. (UBS FS), UBS AG Singapore Branch, UBS AG Hong Kong Branch, and UBS SuMi TRUST Wealth Management Co., Ltd..

Disclaimers