Ray Dalio Gives 3 Financial Recommendations for Millennials

Ray Dalio Gives 3 Financial Recommendations for Millennials

Three Financial Recommendations for Millennials

Millennials, also known as Generation Y, face unique financial challenges as they enter the workforce and begin planning for their future. With student loan debt and a volatile job market, it can be difficult to know where to start when saving and investing. That’s why when successful investor and hedge fund manager Ray Dalio recently gave financial recommendations specifically for millennials, it’s worth taking note.

Ray Dalio, the founder of Bridgewater Associates, is one of the most successful investors. He has a net worth of over $19.1 billion and is widely considered one of the most influential people in the financial world.

Dalio’s success can be attributed to his unique investment philosophy, based on a combination of quantitative analysis and fundamental research. He has consistently achieved solid returns for his clients, making Bridgewater Associates one of the world’s largest and most successful hedge funds.

Dalio’s investment philosophy is also reflected in his personal life, where he strongly advocates financial education and personal development. He has written several books, including “Principles: Life and Work” which shares his personal and professional philosophies, and “The Changing World Order: Why Nations Succeed and Fail” which analyzes the current political and economic landscape.

Here are three of his top financial recommendations that apply best to Millennials.

1. Decide how much you can sock away

Learn about investing and personal finance. The final piece of advice from Dalio is to educate yourself about investing and personal finance. This means understanding how money and markets work, learning about different investment options, and understanding the risks and rewards of each.

“Savings equals freedom and security,” Dalio says. “How much freedom and security do you need?”

“Ask yourself, ‘How long can I get by on my savings without having any income? How many months or how many years of freedom and safety do I need?’ and make sure that you have more than that,” Dalio gives as personal finance advice.

“When I started working, I worked to get six months of savings freedom and security, then a few years, then I started to think about my kids’ needs over time and I calculated that number,” Dalio explains. “I saved to get those amounts of money. I recommend that you do the same.”

“Debt for consumption, or for anything that doesn’t produce more income than it costs, is bad debt,” – Ray Dalio

Start saving early. One of the most important things millennials can do for their future is to start saving as early as possible. However, holding your money in cash is a terrible idea. Turn those savings into investments. Dalio says, “Over a longer period of time, equities [or stocks] will have a higher return, bonds will have a higher return, real estate will have a higher return than cash,” he explains. While there are no guarantees in the stock market, from 1928 through 2017, the S&P 500 index produced a 9.8% average annualized total return.”

The power of compound returns with investments means that the earlier you start saving and investing, the more your money will grow. For example, if you start saving $100 a month at age 25 and earn an average annual return of 7%, by age 65, you’ll have saved approximately over $250,000. But if you wait until age 35 to save the same amount, you’ll only have saved about $120,000 by age 65. [1]

Of course, the more you save and the higher your returns, the faster your capital will grow through compounding. It’s crucial to convert earned income to investment income into the stock market as early as possible to benefit from the full effects of capital growth through compounding returns.

Starting early is especially important for millennials because they have the luxury of time on their side. The earlier they begin saving, the more they can take advantage of compounding and the more they can afford to take on riskier investments with the potential for higher returns.

How can someone start saving when the expenses are high? One way to start is by setting up automatic transfers from your checking account to a savings account. This way, you won’t have to rely on willpower to save, and you can gradually increase your savings over time. Another way is to increase your income, whether through a side hustle or asking for a raise at your current job. Paying yourself first into your retirement account is the best way to start this process.

2. Create a diversified portfolio

Invest in assets that will grow in value. Another important piece of advice from Dalio is to invest in assets that will grow in value over time. This means diversifying your investments and not just relying on cash savings. Historically, assets such as stocks and real estate have grown in value over time and have provided investors with significant returns.

But investing can be risky, and it’s important to remember that past performance is not indicative of future results. That’s why investing is important for the long term, rather than trying to time the market. When investing, it’s essential to have a diversified portfolio that includes different asset classes, such as stocks, bonds, and real estate. This will help to spread the risk and increase the chances of success.

Here’s his breakdown of what a well-diversified portfolio might look like; according to the book “Money: Master the Game” by Tony Robbins is: 30% allocated to stocks, 40% to long-term U.S. bonds, 15% to intermediate U.S. bonds, 7.5% to gold, and 7.5% to other commodities. (The portfolio does need to be rebalanced annually, he adds.)

3. Learn the market’s long-term cycles

“If you deviate from that balanced mix — which I don’t recommend doing because market timing is a tough game for a non-professional and for professionals to play well — know how to play the cycles,” Dalio tells CNBC Make It.

“Know how to buy when everyone else wants to sell, and how to you sell when everyone else wants to buy.” – Ray Dalio[2]

With so much time left before retirement, Millennials can benefit from raising investments during deep bear markets and lowering contributions during the end of bull market cycles. Millennials can benefit from stock market crashes and should become more bullish when the stock market is down dramatically as it increases their buying power. Millennials can look at their investment returns on a 25-year or more time frame and see the odds of great returns in the long term on their side—no need to panic about the stock market falling with decades left to grow capital.


Millennials face unique financial challenges that can be daunting, but by following Ray Dalio’s advice, they can take control of their financial future. By starting early and taking advantage of compound returns, millennials can reap the benefits of time, which is one of the most powerful tools in building wealth. Additionally, investing in assets that will grow in value, such as stocks or real estate, can achieve higher returns over the long term, which is crucial for building wealth. This also means diversifying investments and not just relying on cash savings, which reduces the risk of financial loss and increases the chances of success.

Educating oneself about investing and personal finance is also crucial. It’s important for millennials to understand how money works, learn about different investment options, risks, and rewards, and make informed decisions about their finances. By being financially literate, they can control their financial future and make informed decisions to help them achieve their financial goals.

Following Dalio’s advice, millennials can set themselves up for a successful financial future. Starting early, investing in assets that will grow in value, and educating themselves about investing and personal finance can help them build wealth and achieve financial security. These steps can also help them overcome their unique financial challenges and achieve long-term financial freedom.

Ray Dalio Gives 3 Financial Recommendations for Millennials