Ray Dalio's Investment Blueprint for Chinese Investors: 10 Essential Principles for Building and Preserving Wealth

Compiled by: TechFlow

Guest: Ray Dalio, Founder of Bridgewater

Host: Wang Li Wei

Original Title: 达利欧中文播客首秀: 股债撕裂, 给中国朋友的10条理财法则

Date: August 20, 2025

Chinese A-shares have surged recently while the bond market has crashed, prompting financial advisors to ask a crucial question: Should investors pivot from bond funds to equity funds?

This market volatility coincides with renewed attention on Ray Dalio, founder of Bridgewater Associates. Two events have thrust him into the spotlight: the release of his new book Why Nations Fail Financially, and reports that Bridgewater cleared out its Chinese ADR positions.

People were asking: "Did Bridgewater really sell all its China stocks?"

The reality is more nuanced than headlines suggest. U.S. 13F filings only show American listed securities, they don't capture holdings in Hong Kong or mainland A-shares. While many global funds (including Bridgewater) have reduced Chinese ADR exposure, their overall China equity picture is mixed.

In mainland China specifically, Bridgewater's domestic fund exceeded 40 billion RMB last year. Given strong recent performance, assets under management likely now approach 60 billion RMB, which is roughly one-tenth of Bridgewater's global assets.

A Rare Interview with Ray Dalio on Investment Strategy

Having followed Dalio for nearly a decade, the host seized the opportunity of his book launch to sit down with him. Their conversation covered the macro themes from his book before turning personal: his investment advice for Chinese investors. This marked his first domestic podcast appearance discussing investment strategy openly.

Dalio rarely offers concrete, public investment advice, especially China-specific guidance. But Chinese investors face an unusual environment today. The stock market is hot, yet in this low-interest-rate world, securing steady, decent returns remains challenging. Even amid this bull market, many investors acknowledge that their net gains over the past three years remain disappointingly small. Meanwhile, those who earned substantial profits from bond funds over the previous two years now watch those gains evaporate. The investment landscape has become genuinely challenging for retail investors seeking stable growth.

Key Questions for Today's Investors

In this low-rate environment, how should investors handle sharp market swings? When markets are strong, should they diversify across asset classes and regions? If Dalio is bearish on U.S. Treasuries and the dollar, does this extend to U.S. equities as well?

These questions form the foundation of their discussion, one that offers rare insights into navigating today's complex investment landscape.

Highlights

• From a long-term perspective, cash is a very poor investment.

• The returns of any asset typically consist of two components: price changes and income. When asset returns rely mainly on price appreciation rather than yield, one should be cautious.

• Any time is a good time for diversification. Individuals and investors must be very careful when attempting market timing.

• Only after ensuring basic living standards can one consider taking on more risk to try to earn higher returns.

• Every birthday and Christmas, Dalio gives the children in his family a gold coin. Dalio tells them, they cannot sell this gold coin. They can only pass it on to the next generation on the day the monetary system collapses.

Investment Strategies in a Low Interest Rate Environment

Q1. Stable Returns in a Low-Interest Environment? The Logic Behind the "All Weather" Strategy

Host:

Currently, China is in a low-interest-rate environment, which usually means it's difficult to achieve desirable investment returns. However, I've noticed that Bridgewater's China All Weather Fund has performed remarkably well in recent years, achieving more than 10% annual returns almost every year, while keeping drawdowns relatively small during market volatility.

Could you explain how Bridgewater has been able to deliver such stable performance in a low-interest environment like this?

Ray Dalio:

I'm glad you asked that. Bridgewater's performance over the past six years has indeed been very stable, with the worst year returning between 10% and 14%. I don't recall the exact number, but the average return was about 16%. So, how did we achieve this?

The key is to create balance in the portfolio through proper diversification of assets. When some markets go up, others go down, reflecting different economic conditions. For example, when equities fall, bonds often rise, and gold or inflation-hedging assets usually go up as currencies depreciate. By balancing across these assets, you can reduce cyclical volatility in the portfolio, thereby lowering risk while still achieving good returns.

My investment rule is to have 15 or fewer uncorrelated return streams. For example, in a slow deflationary environment, equities may perform poorly, but bonds could do well. On the other hand, if there's massive money printing, inflation-hedging assets like gold generally perform well. Balancing these assets allows you to earn attractive returns at relatively low risk. That's the "game of investing."

In the long run, cash is a terrible investment. China's challenge is that many investors keep a large amount of money in real estate or cash deposits, which does not form a well-diversified portfolio. Therefore, holding a diversified portfolio instead of just cash is very attractive. That is our core strategy - achieving diversification without being constrained by traditional assets, while making tactical adjustments based on market conditions to maintain balance.

As I've said, my objective now is to pass on these principles. I'm 76, and I plan to launch an investment course to teach them. I hope to provide this knowledge to everyone in China for free or at very low cost, so they can understand how to achieve balance. Overall, as I've described, this approach works.

(Blockflow note: uncorrelated return streams mean assets that don't move together, which helps diversify risk.)

Q2. The Bond Investment Dilemma: When Returns Come Mainly From Price Appreciation Rather Than Yield, You Should Be Afraid

Host:

Currently, the Singapore Wealth Management Institute is conducting research we hope will apply to the Chinese market.

In low interest rate environments, long-term bonds typically perform well, which is why many Chinese investors piled into this sector over the past year. However, when signs of economic recovery appeared, long-term bonds experienced significant pullbacks, just as we've witnessed in recent days. Do you think there are effective ways to identify these warning signs and adjust investment strategies in time?

Ray Dalio:

Let me clarify this. The return from any asset usually consists of two parts: price change and yield. In some points of the cycle, low-yield assets get bid up, becoming very expensive. At that point, most of the return comes from rising prices, not from coupons. While this may look profitable in the short run, it means future returns will be very low. That low yield is an important warning sign of greater risk ahead. So, when you see returns relying mainly on price gains instead of income, you should be cautious.

To deal with this, investors need to regularly rebalance their portfolios. If you don't have a strong market view, a simple rebalancing strategy works: when one asset rises in price, trim some exposure and reallocate funds to other asset classes to maintain long-term balance. For example, Bridgewater relies on this type of dynamic balancing strategy to deliver stable returns. By regularly adjusting allocations, you can reduce risks while keeping the portfolio stable.

Q3. Geographic Diversification and the Market Timing Trap

Host:

I think in a low-interest environment, one good approach is geographic diversification. Bridgewater has done this for many years, and Japan has also promoted diversification through its NISA program. Recently, China has given investors more QDII quotas.

Some Chinese investors believe the U.S. stock market is at historical highs and too expensive; the same for Europe. Do you think geographic diversification is important? Is now a good time to pursue it?

Ray Dalio:

I believe it's always a good time to diversify. Investors must be very cautious about trying to time markets. They should first assume they cannot predict market movements, and then ask: if I have no view, what should my portfolio look like? The answer is a balanced, diversified portfolio. Because if you don't know how an asset will perform, the best option is to stay balanced. Individuals cannot consistently time markets.

Don't build a portfolio just because the U.S. stock market is high. The key is balance. I'd suggest investors keep half their funds locally but diversify the rest through an "All Weather" approach. This includes gold, bonds, and exposure to about 10 different markets. The point is to balance risks, not just focus on the dollar or any other single currency.

Diversification and risk balancing are key to enhancing returns while reducing risks. For example, if I start with one asset, then add a second and third uncorrelated asset with similar expected returns, I can cut risk by about one-third. Scale this to 10 or 15 uncorrelated assets, and you can slash risk by 60% to 80% while maintaining the same expected return. This improves the return-to-risk ratio by up to 5 times. In other words, you achieve the same expected returns while taking only one-fifth of the risk. That's the game.

Q4. The Art of Buying: Beyond Dollar-Cost Averaging (DCA)?

Host:

You've mentioned not trying to time the market. So what's the right approach to investing? Is dollar-cost averaging a good strategy, or are there better methods?

Ray Dalio:

When investing, the key is to focus on the risks you're taking, not just the money you're putting in. For example, equities are about twice as volatile as bonds. So, to balance a portfolio, you need to adjust weights based on volatility, ensuring overall risk is evenly distributed. If you design this risk balance properly, you can meet your investment goals. It may sound complex, but DCA is indeed a good method because it avoids the risk of lump-sum investing and helps build assets gradually.

However, the real key is knowing how to build a balanced "neutral portfolio," one that can perform steadily across different market conditions.

Again, don't try to predict market movements, because market timing is essentially a zero-sum game. Every trade has a buyer and a seller, and there are always some very smart players in the market.Think of it like sitting at a poker table: you need to ask yourself, who's on the other side of this trade? Only a very small percentage can consistently win.

Bridgewater spends hundreds of millions, potentially up to a billion dollars annually, studying markets. Yet even with this investment, looking at the past six years, overall market performance has been disappointing. So if you want steady, consistent returns, I recommend a risk-balanced approach rather than attempting market timing.

Host:

Would you suggest a default All Weather portfolio for China? I remember in 2014, you gave Tony Robbins a U.S.-based version. What allocation would you recommend for Chinese investors?

Ray Dalio:

The same principles apply in every country. It has nothing to do with the country, it's about the tools available. In China, you can also use local instruments to achieve risk balance. The fund I mentioned is a local fund designed to do exactly this. I would emphasize that the instruments are available on shore to be able to achieve that.

Pros and Cons of Different Asset Classes

Q5. Gold: How to View Allocation of a "Non-Yielding" Asset

Host:

Gold is an asset you place great importance on. Over the past year, it has performed quite well, and from a 20–30 year perspective, its long-term performance is also strong. However, many people prefer investing in productive assets. How should we think about, or convince ourselves to invest in, a non-productive asset like gold?

Ray Dalio:

Gold is a non-productive asset, just like cash. If you hold cash, it's also non-productive. The two are very similar. Therefore, you should view gold as a form of money. Its main characteristic is that it serves as an effective diversifier. When currencies perform poorly, gold typically performs well.

I think most people evaluate their portfolios and costs from their own currency perspective. This viewpoint can lead to poor judgments because they fail to realize their currency is depreciating. They see other assets rising, such as gold or other asset prices increasing. But the correct way to view this is through inflation-adjusted terms, using inflation-adjusted dollars or inflation-adjusted currency. Over a long period, gold has been a form of money, and perhaps some digital currencies will also be considered alternative currencies. Overall, debt is also money, and there is too much debt.

What I want to emphasize is that during this time, the value of money has indeed gone down. When I talk about gold, I don't mean you should hold more than an appropriately diversified share of it. In an optimized portfolio, gold typically represents around 15%. Whether it's 10% or 5%, gold provides diversification for the rest of the portfolio. Therefore, it must be seen as a risk-reduction tool against significant overall currency depreciation due to excessive debt and money printing. Gold should be part of a portfolio. But again, don't look at individual components in isolation. Instead, consider how each part combines to form a well-diversified portfolio.

Q6. Why Bearish on the Dollar and U.S. Treasuries?

Host:

If we look at the value of currencies, such as the dollar, I recall you recently mentioned that the U.S. economy is relatively strong while the global economy is relatively weak. This situation seems to favor a strong dollar. But in your view, is the dollar facing a structural downtrend?

Ray Dalio:

I want to emphasize the supply and demand dynamics of debt, because debt is money, and money is debt. Debt is a promise, a commitment to provide you with a certain amount of money. Therefore, debt can be viewed as uncollected money. When you store your wealth, you are essentially storing it in debt. This is what I mean when I say "debt is money, money is debt."

When debt becomes excessive and grows too rapidly, debt problems emerge. At that point, addressing these issues inevitably involves a choice: either you move toward hard currency, which changes supply and demand dynamics, forces interest rates to rise, reduces demand, and causes markets to decline; or you print more money to alleviate the debt burden. In today's economic environment, this choice represents a core issue.

Q7. Dalio's Investment View on Bitcoin vs. Gold

Host:

You just mentioned digital currencies. I recall that in recent years you've also held some Bitcoin. How do you view the investment value of Bitcoin? Any downside or upside compared to owning gold?

Ray Dalio:

I've held a small amount of Bitcoin for several years, and I've kept that proportion unchanged. I see Bitcoin as a diversification tool. Compared with gold, it's an alternative choice. The question is: what constitutes a reliable currency for storing wealth? Bitcoin is undoubtedly very popular, but I think it has some limitations. I don't believe central banks will hold Bitcoin.

Gold is the second-largest reserve currency. First is the U.S. dollar, second is gold, third is the euro, fourth is the yen, and so forth. Central banks hold gold. There's a saying that gold is the only asset you can hold that isn't someone else's liability. This means gold itself is money; it doesn't rely on anyone else's promise to pay you. Gold has intrinsic value and can be held without those risks. This is particularly important in challenging political or geopolitical environments, such as when Russia was sanctioned, or when Japanese assets were frozen during World War II. For these reasons, gold is more attractive to me. But even so, I still hold some Bitcoin as an alternative.

Q8. The Truth About Stablecoins: Are They Worth Holding?

Host:

I noticed you hold Bitcoin because of its value-storage function. Nowadays, many people are paying attention to stablecoins, since they seem to serve a similar purpose. What's your view?

Ray Dalio:

Stablecoins are pegged to a currency. In other words, they represent a claim on that pegged currency, but they typically don't pay interest. From a financial perspective, this makes them inferior to holding a currency asset that provides interest. However, stablecoins do have a clear advantage in transactions, especially cross-border ones. They can be seen almost as a settlement tool, simplifying international money flows. So they're particularly popular with people who don't care much about interest rates, and are willing to give up interest in exchange for transactional convenience.

In high-inflation countries, interest rates may be negligible, so people prefer using stablecoins for transactions. For example, in places like Argentina, if people can't access interest-bearing reserve currencies, stablecoins may serve as an alternative. That's how stablecoins work, but they don't fulfill the main role of a currency that is both supply-constrained and stable relative to other currencies. By contrast, inflation-indexed bonds are a far better asset choice.

At present, China has not yet introduced inflation-indexed bonds, but such bonds are excellent tools for storing wealth. They provide compensation based on inflation rates while also offering a certain real interest rate. This type of asset carries relatively low risk and represents an ideal investment choice.

Host:

After hearing your analysis, I'm beginning to wonder how much real demand there will be for stablecoins. Can they actually solve America's debt problem?

Ray Dalio:

This question still requires time to observe. The basic logic of stablecoins is that buyers will purchase them, especially in emerging market countries where economic instability is higher, and these buyers don't care much about interest rates. They purchase stablecoins for transactional purposes.

The law requires stablecoin issuers to back them with government bonds and debt. So when people buy stablecoins, it leads to purchases of U.S. government debt. The problem is: where does that money come from? If they hold U.S. debt, they would simply transfer it to stablecoins. So what is the new demand? That's why I don't think stablecoins are a good wealth storage tool.

Family Wealth Fundamentals

Q9. Dalio's Family Finance Lesson: Why Give Gold Coins Instead of Toys?

Host:

In a 2019 interview, you mentioned that individual investors face some major challenges. Could you share some practical investment advice for the general public? I also heard that you've been teaching your grandchildren how to invest and manage personal finances.

Ray Dalio:

I think everyone needs to understand the importance of saving. Personally, I calculate how many months my lifestyle could be sustained if I had no new income. Then, I double that number to prepare for unexpected events, such as a major economic downturn.

Savings provide you with a foundation and a sense of security, and this security gives you freedom. This is very important. What I do for my children (who are now adults) and my grandchildren is give them a gold coin every birthday and Christmas. I tell them, you cannot sell this coin. You can only pass it down to the next generation if the monetary system collapses. In this way, they can see the value of gold being carried across generations. I find this far more meaningful than simply giving toys. Of course, I occasionally give toys too, but not many, because toys quickly lose their appeal, whereas a gold coin helps them understand the process of saving and building wealth.

My core idea is that ensuring financial security for yourself and your family is crucial. To achieve this, learning about investing and practicing proper diversification is essential. Only after securing your basic standard of living should you consider taking on more risks to pursue higher returns. For me, high-risk investing is more like a game. I truly enjoy the process because it's full of challenges and excitement.

When saving, you must also consider inflation's impact on your money. Simply put, what you're storing is not just currency but its purchasing power. For example, if the interest rate is 4% and inflation is 3%, your real return is only 1%. These are the principles I recommend for ordinary people, and the ones my family and I personally practice. Only once you master these basics can you move on to higher-risk investment opportunities.

Host:

That's why many people today choose to build different investment "buckets." For example, a safe bucket and a more aggressive, market-oriented one.

Ray Dalio:

But I want to remind everyone that investing is like playing poker. You're facing very smart opponents who may be committing hundreds of millions or even billions of dollars to the game. Therefore, beginners are better off starting with small amounts and accumulating experience through practice. That way, you can observe how professional investors perform, review their strategies and results over the years, instead of being blindly overconfident. Understanding this, and staying humble, is key to successful investing.

Q10. The Importance of Rebalancing: Overcoming Emotional Investing

Host:

Last time you gave me very interesting advice: to act against your own instincts. This might not be easy for most people. So, when adjusting a portfolio, what's the right approach?

I noticed that the Pure Alpha fund performed well in the first half of this year, and last year it also stood out in the global hedge fund industry. However, it still returned some cash to clients. Similarly, China's OS fund did the same earlier this year after achieving more than 15% returns in just six months.

Could you share some lessons on rebalancing? How do you view its importance?

Ray Dalio:

The essence of rebalancing is setting a strategic asset allocation target to maintain portfolio balance. When some markets perform well and asset prices rise, while others perform poorly, rebalancing allows you to adjust your portfolio back to the target. This helps you take profits by selling at higher levels and buying at lower levels, keeping your investing disciplined. That's why rebalancing is so important.

Host:

That sounds like it requires strong discipline and psychological control.

Ray Dalio:

That's the nature of the game. Just like many things in life, it requires self-control. For decades, I've been documenting my decision-making rules and turning them into a set of "principles." Later, I converted these principles into computer algorithms to systematically execute my investment strategies. This way, I avoid being swayed by emotions because I know what the expected outcomes of the plan are.

You must have a game plan. If you're going to do this, your plan should be backtested so you understand how it performs historically. That way, you can avoid emotional decision-making that leads to mistakes.