Last week I posted a definitive summary of my argument in favor of including alternative investments in your investment portfolio. If you did not see it, I encourage you to click on the Alternative Investment category to the right and read Part X.

However, the chart I included with that posting was hard to understand. It had a lot of visual clutter. So here is a revised chart that still conveys the compelling logic behind my recommendation. (OK, I have a bias but its based on my thinking about this stuff for the past 35 years.)

On the left, along the vertical axis, is a “star” which represents money market funds. Virtually no risk of loss but with very little to show in terms of return on investment. At the center is a “triangle” which represents the number that results from putting 60% into the S&P500 Index and 40% into a Bond Index. That’s the standard “balanced” portfolio that I referenced earlier. Behind the “triangle” is a “plus” sign. That represents the universe of “balanced” funds that you could purchase if you chose to.

What I would have you focus on is the large X in the upper left quadrant, and compare it with the benchmark “triangle” in the center. The number behind the X is the average annual return on investment of my recommended portfolio. It is significantly greater than the “triangle” and since it appears to the left of the benchmark point, it means there was less risk of loss during the five years and six months shown on the chart.

With my usual disclosure that whatever happened during the past five plus years is no guarantee of what will happen going forward, I will argue strongly that this approach is among your best chances to make your money grow in these uncertain times.