Just Because It’s Unlikely to Generate Complaints Against Investment Advisors Doesn’t Make the 60/40 Portfolio Best for You

Want Better Diversification for Your Retirement Portfolio than Bonds?

I’ve never liked bonds in my portfolio, but rental real estate works far better for me

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A long-time favorite of financial planners, the so-called 60/40 portfolio allocates 60% to equities and 40% to bonds. More recently, many (e.g. this from Barron’s) have written about the “death of 60/40.”

The reason I don’t love the 60/40 portfolio is that, over the long term, using bonds to reduce portfolio volatility comes at a steep cost of significantly reduced performance. These days, historically low interest rates also increase interest-rate risk for bonds.

In my opinion, unless you’re close to retirement (and maybe even then), there’s a case to be made for being invested 100% in equities.

This Is When Being 100% Invested in Equities Makes Sense