The Ideal Stock/Bond Allocation Based on Your Age

[@ElizabethMaria9]

As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?

[@MaryBarbara7Z]

I think the safest strategy is to diversify investments. Like spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown

[@EdwardAnthony5]

A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k

[@CarolinaJoseph01]

This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? I'm in dire need of proper portfolio allocation

[@EdwardAnthony5]

My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.

[@CarolinaJoseph01]

Just ran an online search on her name and came across her websiite; pretty well educated. thank you for sharing.

[@WestonScally7614]

80% equities 20% cash. the issue is how to allocate stock/bond ratio properly for steady gains and for retirement, yet the indicators are playing a trick on us with ongoing economy instability. What strategies are best for retirement planning?

[@FelineAirstrip]

avoid the hype, my best suggestion is to consider advisory management

[@HarryBishopm]

I've been through the 'bonds are beating stocks' periods since the 90s with no bonds and with all aggressive stock mutual funds. At 66, my IRA and cash accounts are far more than I expected for my retirement. I can easily handle a worst-case 80% stock crash, Thanks to my advisor.

[@WestonScally7614]

pls how can I reach this expert?

[@HarryBishopm]

*Victoria Louisa Saylor* is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.

[@SaintYvess]

Thank you for this amazing tip. I just looked the name up and wrote her up, to schedule a call. many thanks

[@shizue-w7n]

Recently bought some recommended stocks and now they are just penny stocks. There seems to be more negative portfolios in the last 3rd half of 2023 and first half of this year with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?

[@myrle-v4g]

Just ''buy the dip'' man. In the long term it will payoff. High interest rates usually mean lower stock prices, however investors should be cautious of the bull run, its best you connect with a well-qualified adviser to meet your growth goals and avoid blunder.

[@thuylamson-z7t]

The truth is that this is really not as difficult as many people presume it to be. It requires a certain level of diligence, no doubt, which is something ordinary investors lack, and so a financial advisor often comes in very handy. My friend just pulled in more than $84k last month alone from his investment with his advisor. That is how people are able to make such huge profits in the market.

[@Daneilchirs]

nice! once you hit a big milestone, the next comes easier.. who is your advisor please, if you don't mind me asking?

[@thuylamson-z7t]

My go to person is a ‘ANGELA LYNN SCHILLING '. So easy and compassionate Lady. You should take a look at her work.

[@Daneilchirs]

Thank you for this amazing tip. I just looked the name up and wrote her up, to schedule a call. many thanks

[@kw7292]

I pulled the show from January where Rob shared his portfolio. He walks the talk.

[@celts03]

you have amazing videos! I need to call financial advisor on Monday, and get rid of him after listening to all your videos. Much appreciated!

[@ericj9011]

I did a bunch of analysis on this a while back, trying to find a better way than just blindly shifting 1% each year, and it turned out that shifting 1% was a great strategy! I was very surprised. I do think it's good to cap it so you always have at least 50 or 60% in stocks throughout retirement.

[@dwights1464]

I'm not surprised at the people here claiming that high (90% or more) stock allocations are definitely the way to go. However, how many actually stuck to that during the great recession and lost say $250,000 without deciding to sell stock holdings? It's a lot easier to say what you'll do than the reality when you're faced with big losses.

[@clsanchez77]

As long as you do not sell during downturns, and actually are willing to buy stocks during downturns, then this portfolio works great. If you cannot stomach that, then it is not for you.

[@clsanchez77]

…and you don’t actually lose any money in a downturn unless you sell. If you hold, then its only on paper: if you actually buy, which I do, then you are very well positioned.

[@Gr8thxAlot]

I'm shocked by the number of comments advocating 100% stocks. I have to think these people have never been through a crash or unemployment.

[@dwights1464]

@@Gr8thxAlot I'm with you!

[@jeanjasinczuk7543]

​@@Gr8thxAlotIndeed. When a major stock crash happens, everything looks gloomy. Week after week you see the value of your stock portfolio goes down by a significant amount. And there is nothing telling you: wait it will get better soon! This is not also the short term massive drops that hurt the most. It is the week after week going down for 2 or 3 years...

[@BLR653]

Rob my only comment to add to your analysis is that when you are adding money into the market volatility is your friend. The higher standard deviation of the all stock portfolio is advantageous for dollar cost averaging!

[@rontina8686]

I think these % are basically fun to compare your portfolio to and talk about. It really depends on how much $ is in your portfolio. Warren Buffets 5% in bonds may not be = to another person's 100% in bonds. Rob, I really like the way you take time to present and explain this information. Bonds are a tool just like CD's, pension, rental money or a side hustle. If your watching these videos and thinking about how they apply, you're so far ahead of your neighbors up and down your street. 🤑 (We retired at 53 and loving it) ~ 10% in bonds.

[@stevenharris6626]

I thought I could do better than my adviser, but in the long hall, there was very little difference. I enjoy watching the market, and sometimes I ask my adviser what he thinks, and it keeps me busy. Great video !!!

[@shaynebowen5436]

I love your videos, consistently informative, a fresh perspective, exceptionally well prepared, I find them enormously helpful. Thank you so much!!!!

[@TWILLIE639]

Can we actually email you our questions? Yours are the best lessons I’ve found.

[@CMoore-Gaming]

I dont think many people follow their own advice. I tell people to buy and hold a s&p 500 index fund, yet I do stock picks within the s&p 500 because I find it fun. Though incredibly stressful. When family asks me to invest their money with mine, I always refuse because I view what I do one step above gambling. I have a 401k that I dont ever touch.

[@glasshalffull2930]

That extra money you gamble with is what I refer to as ‘mad money.’ I’ve always maxed out the 401k once I got a few raises, buy I also used to buy individual stocks, but never put in any more than I could afford to lose. It was too stressful for me so I finally got out of it. 😂

[@Detectken]

Rob, I don’t understand your bond/stock comparison chart. You chose US Stock Market and US Bond Market. What does that mean? Which investments do those involve? I ran the comparison between Vanguard Total Bond Market Index (VBMFX) vs Vanguard Total Stock Market Index (VTSMX) and SPY (etf) S&P 500. I chose SPY, because it’s history reaches into the 1990s as well. The stock funds have crushed the bonds since 1995. They came close for two brief periods, early 2003 and early 2009. The $10,000, from 1994 to today, grew to $34,797 for bonds, $170,797 total market and $176,141 for the S&P 500. Even with volatility, and except for a few months in early 2009, your investment would always have been worth more in stocks. Less volatility doesn’t trump the actual value of the investment.

[@1714allen]

Hi Rob, additional factors for this decision - total assets, and spending. Two example cases: (1) Warren Buffett mentions 90/10 allocation for his heir. (2) Jack Bogle mentioned that he was at 50/50 at age ~85. Hypothetically, if a person like Buffett has 100M (so 10M in Bonds), and also a frugal lifestyle.... the 10M in bonds could last a long time. It's not clear to me why a person like Jack Bogle felt the need to have 50% of his assets in bonds at age 85. I tend to think about it conceptually like this: (A) spending for next 10 years: 50 to 100% in bonds. (B) years 11 to 20: 30 to 60% in bonds. (C) years 21 to 30: 20 to 40%, (D). years 31+ : 20 to 30%. Then these (averages) could be added together for the total allocation. (75+45+30+25)/4 = 43%. IF, a person in this example, is not planning to spend 50% of overall assets (e.g. leaving them to children), then this 50% could be ~90 in stock. So 50% is invested at 57/43, and 50% is invested at 90/10. thoughts ?

[@vikramkaushik6521]

I am at 80/20 until 60+ .. however I am split between bonds (BND) vs Dividend (SCHD) for fixed income investment. it will be great to get your point of view

[@SuperFEQMA]

SCHD is an equity position, not fixed income.

[@jdgolf499]

Far more important than age, is financial position! How much do you have, and how much do you need. If I have a $2 million portfolio, and need very little above SS and say a small pension, why would I have 50% in bonds at age 65? If I ever had a financial advisor tell me what I needed, based on some predetermined theory, I'd throw them out of the office! I want a plan based on ME!

[@brucehazen8982]

Why would you need an advisor anyway? It sounds like you know the answer (very little to none, for your situation)!

[@markwalters7498]

Exactly. Using an age based formula ignores: How much do you already have in your portfolio? What amount will you need to meet basic expenses? How much additional do you want to spend on non-essential activities such as charitable activities, travel, hobbies, etc.? How much do want to leave in your estate? What is your risk tolerance? What longevity factors need to be considered? My plan is to put enough into a moderate conservative portfolio of 50% stocks, 40% bonds, and 10% cash equivalents to cover basic expenses through age 100, and the rest goes into the stock market. And hope that the government won’t steal my money when they run out of dough.

[@clsanchez77]

Fully agree, this is really based on your risk profile, in which age in only one variable.

[@clsanchez77]

@@brucehazen8982several reasons to require, or at least use an advisor. I rolled my own from 2001 through 2020. Then some life events happened in our 40’s to some friends and had my wife and I talking. We decided we should have an advisor. Not because we need one, or require one, but we are now approaching the age where shit happens. And if shit happens to either one of us, we know there is someone with a level head we can talk money with.

[@freedomworks3976]

“Financial advisor “ lol 😂

[@philkeys1837]

Here's a different perspective. We are in our late 80's and have been living off our investments for 30 years. We recently moved into independent living and are selling our house. We expect to receive about $1M to invest. After setting aside about six month expenses, what stock to bond ratio would be the best for us? We discovered you about two weeks ago and have been viewing many of your videos. We like your presentation style and depth of your presentation.

[@glasshalffull2930]

Will your original portfolio continue to pay your yearly expenses in the independent living ? If this is so, you could be more aggressive and have more stocks. If not, then just invest it at the same allocations you have now. Do your kids or grandkids that need financial help? You could make $10K gifts to each of them each year or to a charity.

[@tombkk1322]

Great video, Rob. I think it’s my third time watching it. Such a valuable piece of information. Thanks again.

[@hrhsophiathefirst4060]

A dash of Rob for the afternoon to keep you awake!

[@igotstaknow]

I've been through the 'bonds are beating stocks' periods since the 90s with no bonds and with all aggressive stock mutual funds. At 66, my IRA and cash accounts are far more than I expected for my retirement. I can easily handle a worst-case 80% stock crash.

[@bdflavors1347]

I'm sure Rob's numbers are correct but I don't agree with the basis of this analysis. I graduated college in 1993 and started investing and my stocks got crushed in 2000, 2008 and 2020 - thankfully, i didn't follow the stock and bond ratio that most advisors push. Instead I chose 25% stocks, 25% cash, 25% Real Estate and 25% Munis and after dollar cost averaging every single year across 3 of the 4 categories (I own the real estate out right), I've never had a negative year of returns. Real Estate has done a ton of the heavy lifting but recently cash has been a major contributor to returns. I'm just saying that there are more than just stocks and bonds to round out a successful portfolio...

[@robc8468]

Well done.

[@snakeonia7542]

41. Have 105% in stock. Bonds are kinda tempting now though.

[@cliffd7164]

Slight twist on allocation: As you age should you shift stock allocation more toward Value? Less volatility than Growth. I am 72 and at 60/40 (stocks/bonds) but pushing more stocks into Value (70/30).

[@clsanchez77]

Does make the portfolio slightly more conservative without tilting from stocks to bonds.

[@Austin-fc5gs]

Just repeating my thanks, and appreciation for the extra live show Q+A content

[@Kimmer]

Not sure that I agree with you Rob on 90/10 vs 100% stocks with many years to retirement. It's all about when access to the money is assumed, but the research clearly shows that all stocks returns more than 90/10 long term, but with higher volatility as you mentioned.

[@clsanchez77]

The biggest benefit I see to a 90/10 portfolio even in your starting years is your ability to rebalance to stocks during downturns. A 100% allocation does not provide this benefit. The key to this working is to rebalance during market swings. If you do not rebalance and just let it ride the waves, then 100% approach will perform better.

[@Kimmer]

@@clsanchez77 That isn't exactly true. Vanguard studies show that rebalanced portfolios of 90/10, 80/20, and so forth produce less returns than 100% stocks long term. Rebalancing is assumed for all of the allocation models. I'm not saying a 90/10 is bad since it does have the advantage of less volatility, but the data shows it will produce lower investment returns as a result. That's why John Bogle said not to worry about rebalancing unless you want to maintain a given risk allocation. It's a balance between higher returns and risk. If you don't need the money for several years, 100% stocks will produce higher returns than any other allocations.

[@JimLongCO]

Rob - What do think about adding money market funds to the mix since they're now over 5%?

[@1wheeldrive751]

At 5% return, over the past 3 years you would have lost 3% to inflation (18% under the current administration). While 5% feels nice compared to the sub 1% that money markets were offering in the past, if it is smaller than inflation it’s not much of an investment. Better than putting it under the mattress.

[@pauravidesai9500]

Thank you for specific, data backed and actionable advice.

[@johnbeeck2540]

Like the live shows Rob! Waiting every two weeks for your Monday show is too long! Keep up the great work!

[@jimgrant1776]

Rob, excellent video. - - - I have a couple concerns. I'd like to hear your thoughts about. #1 - I am troubled to think that a person would go into retirement (age 65?) holding 50% (or more) of his portfolio in stocks. A 65 year old person can't invest for long term as he could die almost anytime and probably doesn't have a family member who could/would manage the portfolio after he dies. #2 - Starting in the mid-1980s and contining for about 30 years, virtually every brokerage / investment advisor was promoting an asset allocation of 60% in stocks and 40% in bonds, or some variation thereof. It all worked out pretty well, as it was a declining interest rate environment and bond values largely rose. - - - However, we have been in a rising interest rate environment for 12-18 months. It seem like an investor needs to take the interest rate environment into account when it comes to asset allocation. However, your video shows no sympathy for that view.

[@commonsense5555]

I much prefer 100% stocks with allocations in SCHD, AVUV, and SCHG mixed with individual REIT’s and a cash cushion for 3-5 years of living expenses in a HYSA. This creates better returns without much extra risk. Bonds as an investment are less stable and provide a similar return to HYSA’s.

[@LansingFish]

Hello would you mind if I ask you cpl of questions

[@stevemlejnek7073]

I just retired. I will turn 58 soon. I am 50% stocks and 50% money market, CD, T bills. All are earning 5% for the foreseeable short term future.

[@Beach-t6b]

Would you consider social security income as income from a bond and use the bond estimate when determining your stock/bond allocation? For example, if SS income is $25,000 the estimated bond would be $625,000, assuming a 4% yield. Then the “SS bond” could count as 25% of a 75/25 $2,500,000 portfolio.

[@peterpass5977]

This is terrific, thanks for your time and expertise. This is the first time I have watched a live event like this really enjoyed it.

[@shaynebowen5436]

I like both your life and pre-recorded videos.

[@johnnyboy5142]

Great video but I think your net worth could somehow play into your allocation. Should someone with a net worth of $10 million be allocating the same as someone with a net worth of $300K?

[@jmc8076]

Many good sources I’ve read and listened to say yes. However tax efficiency is key. A good accountant is a valuable investment unless you pay an advisor who offers this.

[@obifox6356]

Of course not! If you have $10M in assets, consider putting enough to cover 3 years expenses in low risk funds or banks, and other rest in a Total Stock Market Index, preferably in a Roth account. If you have $300K, allocation formulae, taking account of income and expenses, makes more sense.

[@SolemnBankingplc]

I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation

[@capnron65]

Rob, any thoughts on international bond funds like BNDX being part of the bond mix? I'm at 20 BND and 10 BNDX for my "moderate" growth portfolio. I'm not a huge fan, but was advised to take a similar diverse bond allocation.

[@AlwynSchoeman]

Maybe the formula for taxable is higher in equity because bonds tend to generate more ongoing taxable events?

[@joeyannarelly6589]

Hi Rob, if bonds are supposed to be the safe portion, why invest in intermediate or corporate at all? Why not just have your safe portion of the portfolio in a short term treasury bond fund like VSBSX. And just have the risk assets be total market index funds. Thanks, I really appreciate your insights.

[@michaelswami]

Return.

[@godblessyou7376]

I’m not sure, but perhaps to add more diversification to your portfolio.

[@dberry256]

Thank you Rob!

[@Jack51971]

More risk more reward...buy FDGRX or Vanguard Growth Company...I like a ETF VGT...do NOT panic sell on the dips....hold😊

[@enkibumbu]

You've helped me a great deal, including your audiobook.

[@HarshColby]

Bond allocation calculations in old age are determined by your personal level of risk. So whether you add to bonds isn't a matter of wants. It's a matter of needs. For example, if your nest egg is barely enough to pay the bills, then volitility risk is high and more bonds makes sense. If your nest egg is larger, such that you can pay the bills by withdrawing 2% every year, then volitility risk is very low for you, and bonds make no sense.

[@kevinwoolley7960]

You are assuming that dividend yield is not drastically pruned and that stock markets don't take a 10 year plunge. Very few people can live solely off dividends in that scenario, unless their returns from dividends pay at least twice their expenses. People forget how the market can go bad for 10 years. Some bonds make sense for probably 99% of investors in retirement.

[@HarshColby]

@@kevinwoolley7960 Dividends are insignificant. When a company pays dividends, their free cash flow is reduced, and the share price is lowered accordingly. Plus dividends require short term gains tax (much of the time) so worse than selling stocks (and paying LT cap gains tax) to cover bills. I am considering a market plunge. That's why whose with small next eggs need bonds to overcome a 5 year downturn. Markets don't go bad for 10 years without the bond market also suffering. Large next eggs don't have that kind of risk, so can withstand a long term market downturn. (I have very few dividend stocks, and no bonds, and am 67.)

[@Swampdog55]

Rob, what do you think of Ishares Ibonds ETFs, or Bullet bond etfs for someone close to 70? Thanks!

[@rolandofrancis5254]

Great video, Thanks Rob

[@paulgreen7483]

So you’re a podcaster and editor. Got it.

[@wilma6235]

@RobBerger Should you have allocation split at each brokerage or each asset location type (taxable, IRA and Roth)?

[@58russ]

Chris Pedersen with the Merriman Foundation recently did a presentation where he showed that from 1928-2022 in spite of a 2% higher CAGR in stocks alone, a higher 30 yr SWR could be obtained with 50/50 S/T bonds & stocks vs 100% stocks. Respectively, the CAGR was 4.4% vs 6.4%, the SWR was 3.9 vs 3.0% and the max drawdown was -53% and -83%. This seems counterintuitive. Can you explain?

[@dennis6325]

I prefer to adjust my allocation based on how expensive the stock market is. I recommend taking your expected AVERAGE age during your retirement years and subtract your current age, then divide by the P/E ratio of the overall stock market. For example, let's say you are 55 years old, you plan to retire at 65 and expect to die at 85. Let's also assume the P/E ratio of stocks is about 20. Then average age during retirement is 75 less current age of 55, equals 20 years divided by the P/E ratio of 20 equals 100% in stocks. If the P/E ratio was 25 then 80% in stocks. What this equation is doing is trying to match the duration of your investment horizon to the expected duration of your investments. It's quick and dirty, but it works and keeps you out of trouble. Just my two cents to add to the conversation.

[@DILF-DadInLovewFinance]

This is where I wonder if a little bit of market timing comes into play also. Rather than de-risking the portfolio at a set timetable of say every year or 5 years, try to move into bonds when you’re not in a bear market atmosphere, otherwise I feel like you’re selling your equities at their lows. I’m 33 and trying to determine my stock allocation and trying to do a set glide path of increasing bonds every 5 years, but it may not be as plain vanilla as that.

[@dianediliberto1876]

Thank you for another informative video.

[@anthonydelagarde3990]

thank you for the video. like always very informative and I have found value!

[@hanwagu9967]

I'm attempting to find an ideal time allocation between this @Rob Berger page and your other @DoughRoller page. Don't know why they aren't linked or included in the opposing channels. I also don't really understand the difference between the two, other than you are wearing just your Classic T in @DR and your Classic T is under your Untuckit button up @RB; although, up until a year ago, you also just wore your Classic T on this page, too. So, what is the ideal time allocation based on the content of both vlogs?

[@GREGG-43]

As the late Charlie Munger used to say, “never sell.” In doing so you avoid the cyclical issue of downturns in the market. Leaving me in a dilemma of either to sell off positions on my $600k portfolio or buying more brk.a and b on the dip?

[@Jack51971]

Buy dividend paying stocks and reinvest the dividend until you need it...O MO MAIN Whirlpool CHCP Ayers capital group Verizon Whirlpool MMM Enbridge Energy Transfer 😊 etc etc

[@jskweres2]

How does retiring early impact this?

[@BB-cs3kk]

Outstanding study published several years ago by David Blanchette regarding retirement asset allocation in relation to income, % guaranteed income, and bequests.

[@smarkxyz122]

What if you have a fixed perpetuity. My wife is a teacher and she is going to collect pretty fat pension. To me this is a fixed income so do I take that into account?

[@FreeTxn]

When calculating percentage invested in stocks and percentage invested in bonds, do you consider other investments like real estate, or owning your own home in those types of calculations? Would that change things if you retired with a home that was paid for? What would the percentage recommendation of stocks versus bonds be then? Would it be the same? Thanks!

[@countdown2xstacy]

Good question. I’m thinking the percentages would change in accordance to the person’s scenario.

[@jesseh9206]

Cool looking keyboard - which brand/model is it?

[@SD-co9xe]

It makes more sense to have your Roth IRA 100% stocks and put the bonds in pre-tax. The growth will be in the Roth where you will not pay tax on the gains if you follow the rules.

[@M22Research]

A factor not mentioned - your portfolio mix might be impacted by how much you need to draw from your retirement investments. So for example if most or all of your base spending needs are covered by Social Security + a Pension/Annuity/Rental Properties, your retirement funds might be only for special purchases like buying cars/special trips, etc… In this case going more aggressive might be OK since it is largely for your heirs. [Edit: hah, at 25 minutes, this scenario!]

[@Kimmer]

Excellent comment. It seems this logic would also apply if you have a lot of money in investments and could easily ride out a long bear market when stocks are down by using other investments, assuming you have plenty of money. I prefer to be a little more aggressive than these conservative models.

[@mplslawnguy3389]

I am in this scenario. However, I don't trust that my pension will always be there. They have failed, and can fail in the future. The principal amount I've put in over the years is protected, but that's about it. Not saying it's a likely scenario, but a possible one, so I invest like I don't have a pension. I don't even factor it in,

[@teresasinchak8121]

So, please, can anyone tell me what is the problem with not buying bonds but instead buying annuities, if you want more security? I never was a fan of bonds.

[@alphamale2363]

If you come upon some money you don't really need, should you invest it conservatively or aggressively? I can think of arguments for either approach.

[@Jes1919]

If you don't need it, I would go 100% in index funds, and no funds.

[@jmc8076]

Donate to a good local charity where you can see it at work helping humans incl children or animals.

[@andreaveal8314]

Thank you so much, Rob, for your wonderful channel. This one is great as always!

[@michaeltaddele6633]

Unless you've allowed the proponents of this advice to subtract 115 from your IQ, you should be able to tell that something is wrong here. Why should your age determine how much risk you can take? The most striking thing about Graham's discussion of how to allocate your assets between stocks and bonds is that he never mentions the word "age." The Intelligent Investor: Revised Edition: Page 102

[@jdgolf499]

Exactly what I say. Age is a factor, but you financial position is far more important. If I don't need money, or very little, from my portfolio, why would I have a lot of bonds?

[@robc8468]

Stocks can go down 30 40 50 % in one year. So a 50% stock loss takes a 100% get back to even so getting back to even at a normal portfolio return could take 1o years to get back to even. So what would a 50% loss do to the retirement plans of a 59 year old, for example? The 1929 stock crash took until 1954 for the market to break even. Age does matter a lot because it sometimes takes a long time to recover from major down turns for those who are older.

[@Raymondjohn2]

My original retirement plan was to retire at 62, work part-time, and save money. However, high prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.

[@Mohaimam316]

consider financial planning.

[@erdrick22]

Love the show! but I watched after the fact still good. I like the shorter Q&A at the end.

[@noreenn6976]

Hi Rob, watching the replay. Thanks for covering this topic.

[@bernhardluscher]

To what extent does Stock/bond allocation depend on the size of a portfolio vs spending need? Assume you need only 2% from your portfolio wouldn't it make sense to allocate more to stocks when aiming to maximize your end of life estate ?

[@glasshalffull2930]

I’ve always thought these stock/bond ratios depending on age were too conservative. As I approached retirement, I realized I only needed about 1.5% from my portfolio (I have a pension that made up 44% of my salary). I had cash to ride out a few years of downturn if necessary. I decided to stay 100% in the S&P 500. My portfolio has almost tripled in the last 10 years since I retired.

[@burkester1045]

Yet there are a few high profile men like Kyosaki and Schiff who claim gold and silver need to be at 10% hedge as well. Not sure what their angle is if im not buying from them.

[@GlennO303]

Bengen’s paper was published in 1996. Has anyone run the numbers again in 2024 to see if the recommendations need to be adjusted?

[@freedomworks3976]

If your good with money , then your allocation should be 100% stocks. For money you need to spend money market accounts , savings accounts and checking accounts are what you should be using. If your good with money you shouldn’t “need” to touch your stocks for many years. Reminds me of a real estate billionaire , he stated “we only buy we never sell”.

[@Gr8thxAlot]

You don't want to be in your 50's, have long term unemployment, and have a stock crash at the same time. If that happens with 100% equities, you're going to be forced to sell at the absolute worst time. There are many people that got in this situation that ended up having to postpone retirement and take crappy jobs. Bonds would help cushion the blow and ride out the storm.

[@freedomworks3976]

@@Gr8thxAlot You should get good with money , then you will not need to sell stocks. Being good with money means you have excess cash.

[@rgarri6396]

I love all the investors who have the answers but never went through a crash. The market can drop and takes 10 years to break even. At 71 I have seen people kill themself for lost in the market.

[@auricgoldfinger8478]

I retired in 2015 with 70/ 25/5. As stocks have appreciated, my bonds( laddered muni portfolio) have drifted to 18%. I don’t plan on rebalancing. Total portfolio up about 70%, hoping for a doubling by the time I’m 70 in 2025

[@srconrad]

I just retired this year at 60 years of age. I also ended up with this same allocation. The decision not to rebalance is interesting though. I'm guessing if bonds had outperformed stocks, then you would have rebalanced?

[@auricgoldfinger8478]

@@srconrad Yes I would have. I inherited a bond portfolio the year that I retired that skewed me from 15% to 25% bonds. I’m guessing that I’ll settle at 12-15% for the duration

[@howardfriedman7077]

auric: As your cash runs down, do you sell bonds or stock? Or, do your maturing bonds provide 100% of the cash you need?

[@auricgoldfinger8478]

@@howardfriedman7077 Dividends from my taxable equities are distributing about 1.5%. My munis are 2.5-3.5%. Enough for all expenses. Social security in 2.5 years at age 70. RMDs at 73, then I’ll return to dividend reinvestment of my taxable accounts.

[@МЕГАПоЗиТИВ-й2е]

Rob, Right now I've got VOO, VOE and VBR for my stock portion. This is just historically how it happened, I had a "brilliant" idea to tilt to smal cap & VALUE when I initially formed my portfolio. Should I get rid of these and just get VTI? I wanted to do that but hesitating because I don't understand the tax consequences... They are up like 50% vs. my cost basis. Thanks!

[@kw7292]

Not sure of the amount of time you have had your money invested? Have you utilized the portfolio analyzer? Like you I am looking for the best return without a big downside.

[@robc8468]

Try an total return etf backtest of 50% VIG and VYM rebalanced once a year and test it against VTI you might be surprised at the risk vs.reward

[@quantn573]

​@@robc8468 back-testing by design uses historical data. The Fed has kept fed fund rate near zero over 10 years. The rate over the next 10 years is unlikely to be near zero again. It is true that "past performance is not indicative of future returns"

[@frankt1720]

Go Bucks!

[@donandrosieweinrauch1189]

Could you please talk a little more on ETFs munis and duration, especially when over 75 and 32 % tax bracket. Suggestions with taxable accounts. Are intermediates too risky. I’m 60/40 as.

[@MontyPearce]

Would it make sense to temporary move from BND to cash bonds begin to rebound??

[@donofd9626]

I’m 71 years old and retired, but with a part time job. I dump all my earnings in a Roth account. At 65 I had a 50/50 percent account. It is now 70/30 so I’m thinking about rebalancing. My bond allocation is about 50/50 treasuries and bond funds which seem like totally different animals. When people refer to bonds in a portfolio which are they talking about?

[@CaptainBenjamins]

Screw it, I’m doing 100% S&P500 until I reach my FI number and then I’ll allocate it like this video😊

[@fenders53]

Great vid Rob. I am and in year two of retirement at age 61. I think I will drift towards this guidance.

[@HarshColby]

@12:20: If you're not taking out money, volatility doesn't matter. Overall gains, do. And from your chart, stocks will likely give you twice the money in retirement than bonds. Why hold bonds until the risk of a downturn becomes important? When you're 40, there's virtually no chance bonds help you, if you're planning on retiring at 65-ish.

[@rajvo7406]

What about your sanity? Imagine you turned 45 in 2001 with a 100% stock portfolio and watched bonds outperform stocks until you were 58.. Think about it

[@HarshColby]

@@rajvo7406 Okay, let's think about it: Starting with 1M in 2000, stocks would be ahead by 2006, so you were only "at risk" for 6 years, and you'd be ahead 4.12M today. Stocks are the clear winner by a huge margin. Let's check the 2008 crash, to see how the past two major declines turned out: Starting with 1M in 2007, stocks would be ahead by 2012, so you were only "at risk" for 5 years, and you'd be 3.26M ahead today. So, if you're not selling within 5 years, you're millions of $ ahead by sticking with the S&P 500. Btw, I was 100% in stocks in 2001 and 2008, and I'm better off than if I had let emotions ruin my portfolio. Short of a crystal ball, stocks are the best ROI available. I retired in 2010. If you're retiring within 5 years or so, then volatility is important, and it's increasingly important as your time horizon diminishes. That's why I prefaced my comment with "if you're not taking out money".

[@HarshColby]

@@rajvo7406 " ...45 in 2001 with a 100% stock portfolio and watched bonds outperform stocks until you were 58." Bonds didn't outperform Stocks from 2001 to 2014. If you started with 1M in 2001, then at 58, you'd have 2.04M with a 100% stock portfolio but only 1.24M with a 100% Bond portfolio. By being "safe", you would have been behind 800k over those 13 years. If you're not retiring soon, then the fiscally best option is 100% stocks, assuming you put the money in the market and just leave it there. If you can't control your emotions (and sell when the market is down), then Bonds could ave you from yourself. But if you understand how the market works, you realize there are ups and downs, but staying the course wins in the end. Another interesting stat is that if you put $100 in stocks and $100 in bonds in 1928, you'd have 787M in your stock account and 2K in your Bond account today.

[@martingutierrez885]

Rob…I have that issue. Do you remember when ROM The SpaceKnight fought Powerman and Iron Fist?

[@SharadPatel-r9w]

How would you consider Stock/Bond allocations, if one is not dependent and will never be dependent on income from stock/bond investment , since individual has other income like pension or other income.

[@alphamale2363]

Good question.

[@randolphh8005]

Most would argue for an 80% stock allocation, or higher in that situation.

[@USMCAllTheWay]

I roll with 90/10 because those funds will not need to be tapped for at least 10 years. Our pension covers day to day expenses.

[@jdgolf499]

Your question is exactly why what he is saying is flawed! Every person's plan is different, and AGE is not the main factor in determinig your portfolio mix!

[@1Mannco]

Nobody knows the future and even if 'now' your thinking is you won't be dependent on income b/c of a pension, you could stay at 100% stock..or 80/20-90/10 range or use 150 and subtract age?..There are more factors but he's using the number just as a general guide for your portfolio mix. Everybody is different and that's why one can see this as flawed.

[@randy74989]

If you are retired, about 50/50 is a good start (Moderate allocation) and that includes T-Bills, Intermediate Bonds and your money market fund. And a mix of AVGE, FDIF, and MAGS for your equity exposure and Worldwide coverage. You can pick between MAGS and FDIF if you don't want duplicate coverage; however both of these will cover AI, with FDIF being a fund of funds ETF of "DISRUPTOR" companies in five sector ETFs in the stock market.

[@WEABRNC]

I really like this format!!

[@HarshColby]

The historical data Bengen used included high bond returns. This, alone, calls all the other calculations into question. I'm 67 and have never held bonds for this reason. Instead of bond, with returns that don't keep up with inflation, I'm in real estate. 60% real estate, 40% stocks. I don't plan to change this allocation, ever. I was 100% stocks until I was 55.

[@quantn573]

Bond market has changed since last quarter of 2022. TIPS (treasury inflation protected securities) now pays near 2% a year OVER the government's measured inflation rate, and no risk of loss as long as future inflation is above 2%. Current rates for government agencies like Federal Farm Credit Bureau or Federal Home Loan Bank pay over 6.1% a year for 10 year notes

[@HarshColby]

@@quantn573 Yes, but rare over a 30 year retirement span. In retirement, you can't hold bonds long-term if you need the money to pay bills. Before retirement, there's no need to sell, but you're also less susceptible to damage due to market downturns, so can use the extra stock market gains (over bond gains) to build a larger next egg.

[@pengmagno7395]

@Rob Berger signed up for New Retirement and it’s great however I noticed the program never asks about your asset allocation, only optimistic and pessimistic expected returns, whether it’s in a tax-free or taxable account. Unless by linking your accounts they can somehow have direct access to information from your brokerage, I wonder how they can make projections unless it’s just simple math. Great stuff as usual!

[@gbski43]

It's just simple math for the estimates. What do you anticipate your returns to be in each of those various accounts, put that in (on the paid version) and it runs the math out for you. I think their monte carlo simulations will flex it based on deviations possible for the markets.

[@Will-s1s7p]

Good show. Appreciate links to source data. But, …. now wondering who ghost writes your news letter based on your response to the “…Railroad Tier 2 pension…”. A link from Sundays newsletter - the Morningstar article - stated emphatically if one has a sizable (and one would assume reliable…) pension they should be considered as bond allocation give the “fixed income” nature of the payment. As I have will have a solid pension (34 yrs military and counting), that Morningstar link sent me down a three hour rabbit hole chasing references cited, then more references cited, etc. Per that published, I should never be below 90% stocks. For the record, I won’t have the stomach for that and need to consider ramification for my wife as the pension stops one millisecond after I assume room temperature. FWIW, just busting your chops about the “ghostwriting” but am surprised you didn’t at least reference that piece in your “railroad pension” answer. Love the show.

[@edennis8578]

At least one nice thing about bonds is that the dividends are exempt from state income tax. High-interest savings accounts and high-interest CDs are available at the moment, but I don't keep much in any one bank, considering the problems with banks lately. I have a savings account and CDs with Cap1 online and a savings account with Amex online. My small local bank doesn't offer interest rates to speak of.

[@ronn6471]

Stocks and bonds perform the same regardless of the age of the owner!

[@Jen-qb9cl]

What is the name of bond you can choose in. 401

[@BryanColliver]

the math chages big time over that same time 2000-2023 if you put 500$ a month in to a 110,000 diferance. I have been investing for a 25 years and i just cant get myself to buy bonds i use a dividend ETF to add some incom and stubluty i have 25 more years to work so i hope that works over the long hall. HAHA thank you for an amazing vide

[@AEVMU]

Shouldn't choose the worst possible starting date in the last 80 years (in favor of bonds) to run these examples, but point taken.

[@donofd9626]

I think I need to ask again because the whole bond thing confuses me. My BND etf is up .04% YTD, my VBTLX which is supposed to be the same thing is up 2.18% YTD and my I Bonds and Treasuries are u well over 5% YTD. When you say bond investments what do you mean????

[@randolphh8005]

Yep, a huge problem. Supposedly Bengen was using 10yr treasuries. The word “bonds” includes about 10 different investment types from what I can gather. I have never seen a good discussion about this. Also different if you buy funds vs actual bonds held to maturity.

[@Milhouse77BS]

Always wondered about this.

[@enonknives5449]

It seems to me that your stock allocation should not be based on your age; it should be based on your time horizon. How long do you want your portfolio to last?

[@psaunders7898]

Ok Bobby good job

[@MikeAikele-q2x]

It’s pretty simple, do I want a 10% return or do I want a 2 1/2% return? Bonds go up, bonds go down. The only thing a bond fund can protect me from is making money.

[@bribradt3450]

The point of bonds is not to get a high return. You basically get a guaranteed minimal return with minimal volatility when stocks are way down

[@tombkk1322]

@@bribradt3450Exactly.

[@chadgriffith1969]

With inflation at its highest in 40 years, uncertainty clouding the global markets, and a high volatility index, it's high time I review my financial plans to secure my future. I'd appreciate insights on how to allocate a large portfolio, let's say $250k.

[@arlenehill4ril]

Agreed, having the right advisory is invaluable, my portfolio is well-matched for every season of the market and just yielded 100% from early last year. I and my advisor are working on a 7 figure ballpark goal this year.

[@arlenehill4ril]

Personally, I get guidance from Karen Lynne Chess and most likely, you'd find her basic info on the internet, her qualifications speak for itself.

[@okaydamian]

very much appreciated, just inputted Karen Lynne Chess on the internet, spotted her consulting page ranked top and was able to schedule a call session. Ive seen commentaries about advisors but not one looks this phenomenal

[@glasshalffull2930]

*** SCAM ALERT *** Only a fool would choose a financial advisor based on a fake KZbin tip!🤦‍♂️🤦‍♂️🤦‍♂️

[@Jack51971]

Why bonds? There are stable companies paying dividends from 4 to 11 per cent some capital appreciation too..I bonds were 9 PC for a year only because of inflation. 😮