The Barbell Strategy for 2025: Balance Risk and Reward Like a Pro

 

Introduction: Why the Barbell Strategy Is Going Viral in 2025

In the unpredictable investment landscape of 2025, where market volatility has become the norm rather than the exception, investors are increasingly turning to time-tested strategies that provide both stability and growth potential. Enter the Barbell Strategy—an investment approach that's gaining tremendous popularity among both institutional and retail investors seeking to navigate the current economic uncertainty.

The barbell strategy, conceptualized by renowned scholar and risk analyst Nassim Nicholas Taleb, involves maintaining a portfolio split between extremely safe assets and high-risk, high-reward investments, with little to nothing in between. This approach allows investors to potentially capture upside growth while protecting against significant downside risk.

As we look toward the remainder of 2025, this strategy is particularly relevant given the ongoing economic crosscurrents: persistent inflation concerns, fluctuating interest rates, and geopolitical tensions that continue to create market uncertainty. In this comprehensive guide, we'll break down exactly how to implement a modern barbell strategy for today's market conditions, complete with specific fund recommendations and real-world case studies.

Understanding the Barbell Strategy: More Than Just Weightlifting

The barbell strategy derives its name from the weightlifting equipment—with weights on both ends and nothing in the middle. In investment terms, this translates to:

• The Safe End: Ultra-safe, liquid assets that preserve capital (typically 80-90% of the portfolio)

• The Risky End: Highly speculative assets with significant growth potential (typically 10-20% of the portfolio)

• The Middle: Nothing—this strategy intentionally avoids moderate-risk assets

This approach differs dramatically from traditional balanced portfolios, which typically include a range of assets with varying risk profiles. The barbell strategy embraces extremes while eliminating the "mushy middle" that often delivers mediocre returns during turbulent markets.

The 2025 Barbell Strategy: pairing Floating-Rate Treasury Funds with Yield-Enhanced Investments

The Safe End: Floating-Rate Treasury Funds (USFR and Alternatives)

For the conservative portion of your barbell portfolio in 2025, floating-rate Treasury funds have emerged as an optimal choice. These funds invest in government securities whose interest payments adjust periodically based on prevailing short-term interest rates.

Why floating-rate Treasuries work now:

• Inflation protection: As rates rise to combat inflation, these funds automatically increase their payouts

• Low volatility: Government backing provides exceptional capital preservation

• High liquidity: Easy to buy and sell without significant price impact

• Attractive yields: Currently offering competitive returns compared to traditional fixed-rate bonds

Specific fund to consider:

• USFR (WisdomTree Floating Rate Treasury Fund): This ETF has gained significant traction among investors seeking safety with yield. With an expense ratio of just 0.15%, it provides exposure to U.S. Treasury floating rate notes with monthly distributions.

Other quality alternatives include:

• TFLO (iShares Treasury Floating Rate Bond ETF)

• FLOT (iShares Floating Rate Bond ETF)

Visual: Comparison chart showing yield performance of USFR versus traditional bond funds over the past year

The Risky End: Yield-Enhanced Strategies for Growth

For the aggressive portion of your barbell portfolio, consider these yield-enhanced strategies that offer substantial growth potential:

1. Covered Call ETFs: These funds enhance income by selling call options on their holdings

   • Examples: QYLD (Global X NASDAQ 100 Covered Call ETF), XYLD (Global X S&P 500 Covered Call ETF)

   • Potential benefits: High monthly income, reduced volatility compared to outright stock ownership

   • Risks: Capped upside during bull markets

2. Business Development Companies (BDCs): These firms lend to middle-market companies and return profits to shareholders

   • Examples: MAIN (Main Street Capital), ARCC (Ares Capital)

   • Potential benefits: High dividend yields (often 8-10%), exposure to private credit market

   • Risks: Economic sensitivity, interest rate risk

3. High-Growth Technology Stocks: Targeted positions in innovative companies with disruptive potential

   • Focus areas: Artificial intelligence, renewable energy, biotechnology

   • Potential benefits: Asymmetric upside potential

   • Risks: High volatility, potential for significant losses

4. Cryptocurrency and Digital Assets: Small allocations to this emerging asset class

   • Examples: Bitcoin, Ethereum, and blockchain-related investments

   • Potential benefits: Non-correlated returns, growth potential

   • Risks: Extreme volatility, regulatory uncertainty

Implementing Your Barbell Portfolio: A Step-by-Step Guide

Step 1: Determine Your Allocation Ratio

The classic barbell allocation is 90% safe assets and 10% risky assets, but this can be adjusted based on your risk tolerance:

• Conservative: 95% safe / 5% risky

• Moderate: 85% safe / 15% risky

• Aggressive: 80% safe / 20% risky

Step 2: Select Your Specific Investments

Safe Side Options (80-95%):

• 50-70%: Floating-rate Treasury funds (USFR, TFLO)

• 20-30%: Short-term TIPS (inflation-protected securities)

• 10-20%: Money market funds or high-yield savings accounts

Risky Side Options (5-20%):

• 2-5%: Covered call ETFs

• 2-5%: High-quality BDCs

• 1-5%: Select growth stocks

• 0-5%: Digital assets (cryptocurrency)

Step 3: Execute and Rebalance

• Purchase your selected assets according to your allocation plan

• Rebalance quarterly or when allocations drift significantly from targets

• Reinvest dividends from the safe side to maintain purchasing power

Step 4: Monitor and Adjust

• Review your portfolio quarterly

• Adjust allocations based on changing market conditions

• Consider tax implications of rebalancing decisions

Visual: Pie chart showing sample barbell allocation for moderate risk investor

Case Study: Sarah's Barbell Portfolio in Action

Background: Sarah, 42, is a marketing professional with a $250,000 portfolio. She's concerned about market volatility but doesn't want to miss potential growth opportunities.

Previous Portfolio: Traditional 60/40 stock/bond allocation
Performance in 2024: -3.2% return with significant volatility

New Barbell Approach (Implemented January 2025):

• Safe Side (90% - $225,000):

  • $150,000 in USFR (floating rate Treasuries)

  • $50,000 in TFLO (additional floating rate exposure)

  • $25,000 in SGOV (0-3 month Treasury bills)

• Risky Side (10% - $25,000):

  • $10,000 in QYLD (covered call ETF)

  • $10,000 in ARCC (BDC)

  • $5,000 in a basket of AI-focused stocks

Results through Q2 2025:

• Portfolio return: +4.7%

• Volatility: Reduced by 62% compared to previous portfolio

• Income generated: $8,250 (approximately 3.3% yield)

Sarah's experience: "The barbell strategy has let me sleep better at night knowing the majority of my portfolio is protected, while still having exposure to growth opportunities. The floating rate Treasuries have been particularly impressive, keeping pace with inflation while providing steady income."

Common Questions and Answers About the Barbell Strategy

Q1: Isn't the barbell strategy too conservative for long-term growth?

While the barbell approach emphasizes capital protection, the aggressive portion (typically 10-20%) provides ample growth potential. Historically, a small allocation to high-risk assets has generated disproportionate returns while the safe portion preserves capital during downturns.

Q2: How does the barbell strategy perform during bull markets?

During strong bull markets, the barbell strategy may underperform a fully invested equity portfolio since it maintains significant safe allocations. However, it typically outperforms during market corrections and bear markets, resulting in superior risk-adjusted returns over full market cycles.

Q3: Are floating-rate Treasury funds really safe?

Floating-rate Treasury funds invest in U.S. government securities, which are considered among the safest investments globally. While they're not FDIC-insured, they carry the full faith and credit of the U.S. government. The primary risk is interest rate changes, but floating-rate notes mitigate this risk by adjusting their payments as rates change.

Q4: How often should I rebalance my barbell portfolio?

Quarterly rebalancing is generally sufficient. The goal is to maintain your target allocation between safe and risky assets. When the risky portion grows significantly (due to strong performance), take profits and reallocate to the safe side. Conversely, if the risky portion declines, consider adding to maintain your target allocation.

Q5: Can I implement the barbell strategy in my retirement account?

Absolutely. The barbell strategy works well in tax-advantaged accounts like IRAs and 401(k)s. In fact, these accounts may be ideal since they allow you to rebalance without triggering taxable events.

Q6: What's the difference between the barbell strategy and a typical balanced portfolio?

Traditional balanced portfolios include moderate-risk assets like corporate bonds and blue-chip stocks across the risk spectrum. The barbell strategy intentionally avoids these middle-risk assets, concentrating instead on extremes: ultra-safe investments and high-growth potential investments.

Q7: How do I choose which risky assets to include?

Focus on assets with genuine asymmetric return profiles—where the potential upside significantly outweighs the downside risk. Consider your expertise, time horizon, and risk tolerance. For most investors, using ETFs or funds rather than individual securities provides better diversification on the risky side.

Conclusion: Balancing Your Investment Future

The barbell investment strategy offers a compelling approach for 2025's uncertain markets, allowing investors to participate in potential growth while maintaining a strong foundation of capital preservation. By pairing floating-rate Treasury funds like USFR with carefully selected yield-enhanced strategies, you can create a portfolio that's both resilient and opportunistic.

Remember that no investment strategy is perfect for all market conditions, but the barbell approach has historically excelled during periods of heightened uncertainty. As always, ensure any investment strategy aligns with your individual financial goals, time horizon, and risk tolerance.

Ready to implement your barbell strategy? Start by:

1. Assessing your current portfolio allocation

2. Determining your appropriate safe/risky split

3. Researching specific funds that fit each side of your barbell

4. Executing your strategy in a tax-efficient manner

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5 Financial Steps to Support and Invest in Black-Owned Enterprises

 

Introduction: Why Black Business Month Matters

August marks National Black Business Month, a time to recognize and celebrate the tremendous contributions of Black-owned businesses to the U.S. economy and local communities. Established in 2004 by engineering entrepreneur Frederick E. Jordan and John William Templeton, this annual observance highlights both the achievements and the unique challenges faced by Black entrepreneurs .

Despite representing approximately 14% of the U.S. population, Black-owned businesses account for only about 3% of all classifiable firms and generate just 1.3% of total business revenue . This disparity underscores the critical need for concerted support and investment in these enterprises.

This article provides five actionable financial steps you can take to support and invest in Black-owned businesses, not just during Black Business Month but year-round. By implementing these strategies, you'll contribute to closing the racial wealth gap while building a more equitable and vibrant economy for all.

Understanding the Landscape: Challenges and Opportunities

Black entrepreneurs face systemic barriers that make business ownership disproportionately challenging. According to a 2023 survey by Intuit QuickBooks:

• 57% of Black business owners reported being denied a bank loan at least once when starting their business, compared to 37% of non-Black owners

• Black business owners need approximately $21,000 to start their businesses, compared to $16,000 for non-Black peers

• 79% of Black business owners have experienced racism from customers, with 48% experiencing it within the past year 

These challenges make supportive financial practices especially impactful. Meanwhile, Black women represent the fastest-growing demographic in business ownership, with the number of Black women-owned businesses growing by 20.2% in 2020, outpacing the overall growth of Black-owned businesses (14.3%) and women-owned businesses (3.1%) .

5 Financial Steps to Support and Invest in Black-Owned Enterprises

1. Bank Black: Move Your Accounts to Black-Owned Financial Institutions

Why it matters: Black-owned banks are specifically mission-driven to address the racial wealth gap and support Black communities. These institutions understand the unique challenges faced by Black entrepreneurs and are more likely to provide fair lending practices and personalized support .

How to do it:

• Research Black-owned banks and credit unions in your area or those offering online services

• Consider moving your personal and business accounts to these institutions

• Explore products like secured credit cards and second-chance checking accounts designed to build credit in underserved communities

Examples of Black-owned financial institutions:

• OneUnited Bank: The largest Black-owned bank in the U.S., offering digital banking services nationwide 

• Citizens Savings Bank and Trust Company: The oldest continuously operating African American-owned bank in the U.S., founded in 1904 

• Guava: An online banking platform specifically designed for Black small-business owners 

2. Consciously Redirect Your Spending

Why it matters: According to studies, a dollar stays in a Black neighborhood for an average of just six hours before circulating elsewhere, compared to 28 days in other communities. This represents a massive economic leakage that undermines wealth building in Black communities .

How to do it:

• Use online directories and apps like EatOkra to find Black-owned businesses in your area

• Implement "Black Food Fridays" or similar themed shopping days to build habits

• Allocate a specific percentage of your monthly budget to spending at Black-owned businesses

• When making significant purchases, research Black-owned alternatives first

Statistical insight: Approximately 3.12 million Black-owned businesses in the United States employ 1.18 million people and generate $133.7 billion in total sales .

3. Invest Directly in Black Entrepreneurs and Businesses

Why it matters: Black entrepreneurs receive less than 2% of overall venture funding, with Black women receiving just 0.34% of all venture capital . Direct investment can help address this dramatic funding gap.

How to do it:

• Explore investment platforms that focus on minority-owned businesses

• Consider peer-to-peer lending to Black entrepreneurs through reputable platforms

• Invest in Black-owned stocks and ETFs when available

• Participate in crowdfunding campaigns for Black-owned businesses

Success story: Bank of America has committed to giving more than $500 million in equity investments to minority- and women-led fund managers, with more than 65% of these funds led by Black individuals .

4. Advocate for Corporate and Government Support

Why it matters: Systemic change requires policy changes and corporate commitment. Advocacy helps create lasting structural support for Black businesses beyond individual actions.

How to do it:

• Support organizations lobbying for policies that benefit Black entrepreneurs

• Encourage your employer to diversify their supplier chain to include Black-owned businesses

• Advocate for financial education programs in underserved communities

• Support funding for Community Development Financial Institutions (CDFIs)

Notable example: Bristol Myers Squibb reached its goal of spending $1 billion globally with diverse-owned businesses three years earlier than planned, supporting Black-owned firms like Sodexo Magic and BCT Partners .

5. Provide Financial Education and Mentorship

Why it matters: Many Black entrepreneurs lack access to the networks and financial knowledge that facilitate business growth. Sharing expertise can be as valuable as financial support.

How to do it:

• Volunteer with organizations that provide business mentorship to Black entrepreneurs

• Share financial literacy resources in your community

• Offer pro bono professional services to Black-owned businesses

• Create or participate in networking events connecting Black entrepreneurs with potential advisors and investors

Program example: Capital One created a supplier diversity mentoring program that pairs small business owners with mentors from across the company. The program covers topics like marketing, social media, design-thinking, cybersecurity, legal and finance, and change management .

Case Study: OneUnited Bank - A Beacon of Economic Empowerment

OneUnited Bank, the largest Black-owned bank in the United States, provides an excellent case study in supporting Black economic empowerment. Founded in 1968 following the assassination of Dr. Martin Luther King Jr., the bank was created because African Americans couldn't get financial services from white-owned banks .

Strategies and Impact:

1. Digital Innovation: In 2006, OneUnited became the nation's first Black digital bank, a strategic move that paid off significantly during the pandemic when the bank doubled in size .

2. Community Engagement: The bank's mural project in Liberty City, Miami, featuring images of Trayvon Martin and Michael Brown, became a turning point in connecting with the community. President Teri Williams noted, "People started to come into the bank who had never been in a bank before in their lives" .

3. Product Development: OneUnited offers products specifically designed to address historical disparities, including secured cards to help build credit and second-chance checking for customers who have previously been rejected for accounts .

4. Social Activism: The bank describes itself as "unapologetically Black" and has supported Black Lives Matter and social justice movements for years. This authentic positioning attracted customers from all 50 states who wanted to align their banking with their values .

Customer Success Story:

Willie Simmons and Darrin Jenkins, co-owners of Public Security, Inc. in Los Angeles, have banked with OneUnited for 25 years. The bank provided them with a line of credit to build their business and helped them secure a PPP loan during the pandemic. "Any of the banking services that I've needed, they've been able to take care of," Simmons reports .

This case study demonstrates how targeted financial services combined with authentic community engagement can create substantial impact for Black businesses and communities.

Frequently Asked Questions (FAQs)

Q1: Why should I specifically support Black-owned businesses?

Supporting Black-owned businesses helps address historical economic disparities and contributes to closing the racial wealth gap. These businesses face systemic barriers including limited access to capital, higher startup costs, and customer discrimination. Your support helps create a more equitable economy while often discovering excellent products and services .

Q2: How can I find authentic Black-owned businesses to support?

Use online directories and resources such as:

• Local Black business associations and chambers of commerce

• Social media hashtags like #BuyBlack and #BlackBusinessMonth

• Apps like EatOkra for Black-owned restaurants

• The Department of Small and Local Business Development in various cities often maintains directories 

Q3: What are some challenges Black business owners face when seeking funding?

Black business owners face several unique challenges:

• Higher denial rates: 57% of Black business owners report being denied bank loans at least once when starting their business

• Limited venture capital: Less than 2% of overall venture funding goes to Black-owned startups

• Less favorable terms: Even when approved, Black business owners often receive less favorable products and lower funding amounts 

Q4: How does banking with Black-owned financial institutions make a difference?

Black-owned banks are mission-driven to address systemic economic challenges in Black communities. They're more likely to:

• Offer personalized loan application assistance

• Accept alternative credit history

• Provide financial education resources

• Understand the unique challenges and opportunities in Black communities
  These institutions reinvest deposits back into the communities they serve, creating a virtuous cycle of economic empowerment .

Q5: How can I support Black-owned businesses beyond just spending money?

There are several non-financial ways to support:

• Amplify on social media by sharing and tagging Black-owned businesses

• Provide mentorship if you have business expertise

• Offer professional services pro bono

• Advocate for policies that support Black entrepreneurs

• Participate in community events that feature Black-owned businesses 

Conclusion: Building Economic Equality Together

Supporting Black-owned businesses isn't just about individual transactions—it's about participating in a movement toward economic justice. By implementing these five financial steps, you contribute to creating a more equitable business landscape while discovering innovative products and services.

Remember that consistent, year-round support creates more impact than once-a-year gestures. As Teri Williams of OneUnited Bank emphasizes, we've come a long way but still have more work to do to address economic disparities .

This Black Business Month, take at least one concrete action from this list—whether it's moving your accounts to a Black-owned bank, consciously redirecting your spending, or mentoring an emerging Black entrepreneur. Together, we can build on the legacy of Black Wall Street and create thriving Black business communities for generations to come.