The Inadequacy of a 60/40 Portfolio in Today’s World

For many years, ⁣a large percentage of financial planners and stockbrokers crafted portfolios for their clients that were composed of 60% equities and 40% bonds ⁢or other fixed-income offerings.​ And these so-called balanced⁢ portfolios did rather well throughout the 80s and 90s.

But, a series of bear markets that ⁤started in‌ 2000 coupled with historically low-interest rates have eroded the popularity of ⁤this basic approach to investing. Some experts are now saying that a well-diversified⁤ portfolio must ⁤include more asset classes ⁤than⁤ just stocks and bonds. As we’ll ⁤see below, these experts feel that a much broader approach must now be taken in order to achieve sustainable long-term growth.

Key Takeaways

Once⁣ a mainstay of savvy⁣ investors, the⁢ 60/40 balanced⁣ portfolio no⁤ longer appears to be keeping up with today’s market environment.
Instead of allocating 60% broadly to stocks and 40% to bonds, many professionals now⁢ advocate for ⁢different weights and ​diversifying into‌ even…

2023-12-24 19:50:46
Article from www.investopedia.com
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