Introduction to I-CASH method

I-CASH method – Five Themes to Understand Financial Market Evolution

We will use the acronym I-CASH to simplify the analysis of the situation and establish a “mental model” for all those who wish to build a portfolio of passive stock market income. The I-CASH model, while it may seem anxiety-inducing at first glance, simply aims to remind us of the four major trade-offs to be made before building an “income machine”:

• I for Internationalization: What degree of internationalization for your portfolio? This dimension includes both the question of which geographical areas you will prioritize and the choice of currencies in which you will invest.
• C for Currency: This the consequence of the former letter: you need to invet in multicurrencies in order to mitgiate currency chaos risk.
• A for Asset Class: There is a range of income-generating asset classes: high-dividend stocks, preferred shares, bonds, REITs, and covered call ETFs. Diversification reduces reliance on any single asset type for income stability.
• S for Sectors: Do you want to be invested in all sectors without exception or not? Which sectors do you wish to prioritize? And which ones do you want to absolutely avoid?
• H for High Yield Level: What level of income do you expect from your investments? The answer to this question is much more nuanced than its phrasing might suggest, as it relates to individuals’ risk aversion, their age, the proximity of their potential retirement, etc.