Suppose you hold 1 million yuan. No day-trading, no guessing which sector will lead next year — you just want the money placed a bit more steadily, growing slowly over the long term. Now, several options sit before you. The simplest is going all-in on Chinese stocks. A steadier route adds some bonds to the equity mix. A step further puts 10% into gold. Or you could shift a slice of funds to the U.S., buying American equities and Treasuries. The question: after 13 years, which path earns more? And which journey feels the most uncomfortable? I recently ran the full calculation on this. The results are quite interesting.

Start with a 1-million-yuan experiment spanning 2013 to 2025, covering 13 full years. I designed five very simple portfolios. The first is 100% Chinese stocks. The second blends 60% Chinese stocks with 40% Chinese bonds. The third adds 10% gold to the China stock-bond mix. The fourth shifts part of the stocks and bonds to the U.S., creating a mix of Chinese stocks, U.S. stocks, Chinese bonds, and U.S. bonds. The fifth layers 10% gold on top of that China-U.S. stock-bond base. All overseas assets are ultimately converted back to yuan, meaning we view everything strictly from a Chinese investor's perspective. To keep the test fair, stocks use total-return figures including dividends, bonds include interest income, and each portfolio is rebalanced back to its original weights at year-end.

Look first at the headline result. Assuming 1 million yuan invested in 2013 and held through the end of 2025, the pure China stock portfolio might leave you with around 2.48 million yuan, while the China-U.S. stock-bond-gold blend could reach roughly 3.07 million yuan. At first glance, many people might jump to a quick conclusion: that simply reflects how well the U.S. market has performed over this period. That factor is certainly at play. So if the article only talked about "2.48 million versus 3.07 million," the meaning would be limited. What truly grabs my attention is the next set of numbers.

How much you earn is one thing, but how bumpy the road gets is another. Investing has a frequently overlooked issue: just because you end up making money doesn't mean you can hold on through the middle. Two portfolios could both turn 1 million yuan into over 2 million. But if one swings wildly between big gains and losses while the other stays relatively stable, the experience of holding them is completely different. Over these 13 years, the annualized volatility of 100% Chinese stocks stood at roughly 24.02%. The China-U.S. stock-bond-gold mix came in at about 9.27%. What does that mean? You don't need to grasp financial jargon like "standard deviation." Simply put, the former feels like riding a roller coaster, while the latter is more like taking a high-speed train.

What's even more interesting is that this stability doesn't come at the cost of returns. The 100% China stock portfolio delivered an annualized return of about 7.22% over these 13 years. The China-U.S. stock-bond-gold mix achieved 9.01%. In other words, within the 2013–2025 window, the diversified portfolio actually earned more, yet its volatility was only about 40% of the pure stock approach. That's what I understand as "investment efficiency." It's not just asking: who makes the most? It's asking: for every unit of risk I take, how much return do I actually get?

Personally, I care even more about another figure: how much you lose at the worst moment. Many people focus on annualized returns when building asset allocations. But I increasingly believe family investing should pay more attention to whether you can withstand the worst-case scenario. Because a 20% gain on 1 million yuan makes everyone happy. But if 1 million yuan first drops to 600,000 and then slowly climbs back, most people never make it to the end. In this test, calculated using year-end net values, the maximum drawdown for 100% Chinese stocks was about -29.73%. With 60% Chinese stocks and 40% Chinese bonds, it narrowed to -13.85%. Adding 10% gold brought it down to -10.74%. The China-U.S. stock-bond-gold mix, with 10% gold, saw the drawdown shrink to just around -7.42%.

Let me put that in plain language. With the same 1 million yuan, one portfolio at its toughest moment might show a book value of around 700,000 yuan. Another portfolio would still have roughly 920,000 yuan. Do you think those two investment experiences feel the same? This is why I've always believed: the true value of asset allocation isn't just about making money — it's about helping you survive long enough to see the profits. Gold isn't meant to make you rich. In this test, I deliberately pulled gold out for a closer look. Because there's a tendency nowadays for opinions to swing to two extremes. One camp says gold is useless — it generates no interest and no corporate earnings. The other, fueled by gold's recent surge, treats it as a cure-all asset. I think both are wrong.

Here's a telling data point: if this test had only run through 2023, the portfolio with 10% gold would have shown a slightly lower annualized return. Through the end of 2024, it remained slightly lower. Only after gold's massive rally in 2025 did the gold-inclusive portfolio's long-term returns overtake the others. But one thing barely changed throughout: adding gold lowered the portfolio's volatility and reduced drawdowns. That's what I see as gold's true position in a family's asset mix. I buy gold not because I expect it to rise every year, but because if someday stocks don't work and bonds don't work either, I want a third option at home. Gold, then, acts more like a "risk budget" than a return-acceleration tool.

What truly improved the portfolio wasn't actually gold, but cross-region diversification. Compare two blends. The China stock-bond-gold portfolio delivered an annualized return of about 6.99% with volatility of 13.85%. After shifting some stock and bond assets to the U.S., the China-U.S. stock-bond-gold mix saw its annualized return climb to 9.01%, while volatility fell to 9.27%. Why? The reason isn't complicated. China and the U.S. don't rise together every year, nor do they fall together. Take 2023 as an example. The CSI 300 total return fell roughly 9%. Yet the China-U.S. stock-bond-gold portfolio gained about 9% that year. The gap between the two was nearly 18 percentage points. Consider 2018 as well. Chinese stocks performed terribly. If all your assets sat in Chinese equities, the pressure was immense. But when the portfolio also held Chinese bonds, U.S. stocks, U.S. bonds, and gold, not everything dropped alongside the A-share market.

The core principle of asset allocation boils down to four words: don't rise and fall together. But diversification also carries a very uncomfortable drawback. 2014 is the perfect example. That year, the Chinese stock market was exceptionally strong. The CSI 300 total return surged over 50% in a single year. If you held 100% Chinese stocks, that year felt fantastic. The China-U.S. stock-bond-gold mix, however, gained just over 20%. At that moment, you'd inevitably question everything: others made 50% in a year, so why am I only at 20%? This is precisely where diversification gets hardest to stick with. I'd even argue that the biggest enemy of diversification isn't the bear market — it's when others are making money and you're making less than they are. Because when a bear market hits, everyone loses together, and that's easier to accept. The truly painful part is during a bull market when someone fully invested in one market is raking it in, while you're holding bonds, gold, and overseas assets that all seem to be "dragging you down."

But here's the thing: at the end of 2013, who could have known with certainty that Chinese stocks would rise over 50% in 2014? If you could predict the top performer every year in advance, you wouldn't need asset allocation at all. The very reason we need it is precisely because we don't know. When Chinese investors move money overseas, another issue is unavoidable: currency exchange rates. Many people assume that since they buy a QDII fund with yuan and never actually convert to dollars, exchange rates don't matter. That's not true. As long as the underlying assets are U.S.-based and there's no currency hedging, your final yuan-denominated return isn't just about U.S. stock performance.

For example, if the S&P 500 rises 10% and the dollar simultaneously appreciates 5% against the yuan, a yuan-based investor could end up with roughly a 15.5% gain. But if U.S. stocks rise 10% while the dollar depreciates 10% against the yuan, your final yuan return could be close to zero. So Chinese investors buying into the U.S. market are truly purchasing two things: U.S. asset returns plus the dollar-yuan exchange rate movement. Cross-region investing naturally leads to cross-currency exposure. What's more intriguing is that over these 13 years, the dollar actually helped reduce portfolio volatility. I also ran a simple counterfactual test. Suppose from 2013 to 2025, the dollar prices of U.S. stocks, U.S. bonds, and gold all followed their real paths, but the dollar-yuan exchange rate never moved. What happened?

In the real world, the China-U.S. stock-bond-gold portfolio had an annualized return of about 9.01%, volatility of roughly 9.27%, and a maximum year-end drawdown of about -7.42%. With the exchange rate held completely flat, the annualized return dropped to about 8.49%, volatility rose to roughly 10.74%, and the maximum year-end drawdown expanded to about -12.03%. In other words, across this 2013–2025 period, the dollar not only contributed part of the returns for Chinese investors but also acted as a source of risk diversification. But don't take this to mean the dollar will definitely rise in the future. In 2017, 2020, and 2025 — years when the yuan appreciated — the dollar clearly dragged down the overseas asset returns of Chinese investors. So the dollar is not free money. It's simply another variable that doesn't move in perfect sync with Chinese assets. Sometimes it helps. Sometimes it hurts. And that, precisely, is what diversification means.

After running these numbers, my understanding of asset allocation has actually become simpler. In the past, we liked to ask: will A-shares or U.S. stocks rise next year? Can I still buy gold? Will the yuan or the dollar go up? But if a family's wealth security over the next 20 years depends on me getting every one of those calls right, that itself is a high-risk proposition. So now I prefer to ask three different questions. What if my stock picks are wrong? That's why I need bonds and gold. What if the Chinese market underperforms over the next few years? That's why I want some overseas assets. What if the yuan-dollar trajectory doesn't match my expectations? That's why the family's purchasing power shouldn't be 100% staked on a single currency.

This 13-year historical test, of course, can't prove that the next 13 years will repeat the same outcome. The U.S. stock market has been in a very strong cycle over this period. And to keep the data simple and clear, the maximum drawdown here uses year-end net values, not intraday peak-to-trough figures, so real investing would feel more severe. This isn't meant to tell anyone to copy a specific allocation ratio. Nor is it saying the U.S. will surely win, China will surely lose, or gold will definitely keep rising. What I truly want to convey is this: the purpose of asset allocation is never about predicting the future. It's about ensuring your family's wealth doesn't depend on a streak of correct guesses to turn out fine. We don't know which asset — stocks, bonds, or gold — will do best over the next 20 years. We don't know whether China or the U.S. will be the next winner. And we don't know where the yuan and dollar are headed. But precisely because we don't know, we need to diversify. If you've read this far and want to assess whether your own family assets are truly "diversified," I've created a Family Global Asset Allocation Checklist. Fill in your deposits, stocks, funds, gold, insurance, and overseas assets, and it will help you re-examine your money from several angles: Are your assets overly concentrated in stocks or property? Is most of your wealth pressed into a single market like China? Are nearly all your assets ultimately exposed to yuan purchasing power? Are gold, overseas assets, and defensive holdings sufficient?

Many families appear to have substantial assets, but once you break them down, the underlying bets might all be on the same risk. To get this checklist, you can add my WeChat at wangdd104 with the note "asset check," and I'll send it to you. Data notes: This test covers full years from 2013 to 2025. Chinese stocks use the CSI 300 total return index; Chinese bonds use the ChinaBond Composite Index; U.S. stocks use the S&P 500 Total Return; U.S. bonds use the Bloomberg U.S. Aggregate Bond Index; gold is priced in U.S. dollars and converted to yuan; overseas assets convert to yuan returns at year-end USD/CNY rates. Portfolios are rebalanced annually. The maximum drawdown here is based on year-end net values and does not represent intraday or monthly maximum drawdowns. Historical data does not guarantee future returns.