The 60/40 Portfolio--Good, Bad, or Ugly?

[@rob_berger]

Article with resources: robberger.com/60-40-portfolio/

[@jenniferciari204]

Thank you. This simply lazy 60/40 investing strategy has served me well over the years, but then when we have markets like 2022 and I hear all the headlines out there, sometimes it gets in my head and I start doubting myself and questioning myself. Thank you for doing this in that logical, down to earth, straight forward manner that reminds us why we don't get caught up in the drama of today and think long term. Oh! And I love the T-Shirt !!!

[@royjones59344]

The way I would look at it is that the allocation that keeps you from selling everything after a 30% drop in the market is what you should use. Selling at the bottom is the worst investing mistake you can make. Enjoy your videos.

[@diggin420]

The I bond is lately a great 'safe' option at 7 %. I have held for 10 years as an investment insurance policy. The remainder of my portfolio is 15% bond funds and 85% value and dividend stocks, and I'm 55!

[@PJBHolden]

Great video Rob. I’m 60 and have been contemplating moving from 100% stocks to a stock/bond mix for some time now. I was always worried about losing growth but I feel much better now about a 60/40 mix!

[@gooddollie]

Excellent video! I have heard so much negativity around the 60/40 split (and the 4% withdrawal rate as well). I was about to re-balance my portfolio, and then decided to check out a YT video. I have 16 months to go before retirement age at 65. I'll be subscribing to your channel. Thanks for sharing.

[@johnbrown1851]

I have mostly TIPS and a much smaller percentage of bonds with about 60% equity ETFs and mutual funds. Not looking for a huge return on that portion of my portfolio, just want to keep up with inflation and have a buffer to protect against sequence of return risk when I retire in a few years.

[@scottfreeman4190]

You're the best financial commentator out there by far.

[@AUtiger1320]

What I saw in this video (referring to the chart at 5:08) is that even though the max drawdown was much greater with the 100% stock portfolio, you still had more money with it compared to the 60/40 portfolio even during the early 2000s tech bubble, 08-09 financial crisis, and the 2020 COVID dip.

[@METVWETV]

The Covid dip was a Buying opportunity

[@METVWETV]

Exactly! Stocks simply outperform. If you can focus on that, you'll ignore the downturns as a necessary dip on the Rollercoaster

[@kmque3166]

Cool vid Rob! All my friends who are aggressive go w 80% stocks or more cos decades to retire, however, have friends who want to sleep at night so they are moderate and do 60/40 like my parents.

[@johnhenderson7081]

This is what I need to look at since retirement is just around the corner.

[@michelhedley1805]

Thank you. I keep hearing that the 60/40 portfolio days are over.

[@giuliotoffano4763]

Watching this in October 2022 :D after equity and bond fall significantly this year. Spot on

[@rivermarkwealth-moneymatte7939]

Hey Rob, great video and well-researched. Question for you: Do the comparisons (in Portfolio Visualizer) between the 60/40 and 100% stock portfolios include reinvested dividends in the CAGR's? I would have expected the 100% stock portfolio to show a wider margin over the 60/40 and was wondering if the tool was simply taking the index performance and excluding the very tangible benefit of reinvested dividends. Thanks!

[@markmorris2517]

Great information, Rob. Once again shows strong support (with data to back it up) for 60/40 when withdrawing ~4% (plus inflation in subsequent years) in retirement as a sound plan.

[@pengmagno7395]

@rob_berger everything you mentioned on this video happened in 2022 when stocks fell 20% and with interest rates going up bond funds fell as well but you’re right we all are long term investors, this era is just a blip in a person’s investing horizon and that staying the course is key to investment success

[@MountainManFred]

That was incredible! That's the first time I've heard it make sense... Thx so much..

[@AK-ky3ou]

This was a great one

[@spb81]

Has there ever been a case where debt levels, both government and private business and individual been so high? Does this put a lid on what high quality bonds are able to pay out in the future until a full deleveraging occurs?

[@loganpaulgage9665]

Another helpful video. Thanks so much!

[@shahidmirza2714]

Excellent video!!!! Thank you 😊

[@yanmamabear5734]

Great video. Would you make a video comparing performance of long term (meaning 20 years duration) performance of a two fund 60/40 portfolio (US total stock market index and International total stock market index), vs. a four fund 60/40 portfolio by adding in US small cap index and Non-US small cap index? Assume both portfolio just have one total US bond index fund for the 40% bond allocation. Just curious to see if having a more diversified portfolio really help either (1) increase returns or (2) decrease risk that much, during both accumulation stage and distribution stage.

[@rob_berger]

It's on the list.

[@tekootianderson]

Mr Bogle endorsed the 60/40 portfolio. The 60/40 is a war chest or work horse portfolio.

[@DaystarHiker]

does the 4% rule exclude the amount my portfolio returns? Si...if I am getting a 6% avg return am I taking 4% in addition to the 6%?

[@fredk4136]

How about internation, is there any need for international stock and bond in portfolio? Something like Vanguard lifestrategy

[@ld4974]

Interesting that you mention a Vanguard fund. John Bogle, the founder of Vanguard, felt that international funds were not needed to have a diversified portfolio. He advised that if you did want to diversify internationally, limit it to 20% of your overall portfolio.

[@geoffgordon9569]

Going with a total U.S. stock market fund and a total U.S. Bond fund. Plain and simple.

[@vnilla2921]

Great show. Can you model a S&P 500 portfolio with a 5% withdraw rate from 2000 to 2021 vs the 60/40 portfolio and add your comments. I did this and used long treasuries as my bonds. It’s very surprising and was wondering what your thought are. It this valid or an “over fitting” model bias?

[@kennyhart2699]

Go to Josh Scandlen channel on you tube . He does alot of these comparisons from 2000-2020. Vanguard Wellington fared really well for it being a 65/35 fund

[@randychestnut6591]

Rob, what do you think of the Guyton / Klinger model? They advocate 65% / 35% with 10% of the total being in cash or cash equivalents, coupled with an interesting rebalance / withdrawal strategy and guard rails to keep you from withdrawing too much or too little?

[@nikolakasherov1617]

Very interesting and important topic.

[@Taibucko]

NTSX?

[@TheSorrowWithinMe]

Which bond etfs/index funds do you recommend? Just a total? Bnd or fxnax? Corporate? Or just intermediate treasury?

[@rob_berger]

As I mentioned in the bond investing video, a total bond fund is solid, as is a Treasury bond fund. What I'm currently debating is short term vs intermediate. I've been intermediate for a very long time, but have moved some of my bonds to short term, yet I'm still evaluating that decision.

[@TheSorrowWithinMe]

@@rob_berger thanks! I have to rewatch it. Being so long it's hard for me to digest it all. 😪but I love your videos.

[@70qq]

thanks

[@kw7292]

Rob, new to the channel. Like your approach and information. Thank you

[@billlittle1257]

Rob I have a question I have recived an insurance dispersement that pays 3% and allows unlimited withdrawals, it works like a bank account that pays 3%. In the 40/60 scenario can I substitute this fund for stocks?

[@pnkrckmom]

Thank you so much for this video!

[@mikeshah5504]

Hi Rob, great video and awesome content. Loved it. Question -Where can I get the portfolio visualizer? Thanks and keep up the great work.

[@juanchavarria1815]

Rob Much appreciate the video 👍

[@chuckmurray1825]

I think Vanguard's Wellington Fund is the 60/40 with good historical data. I'm with you on the diversification. I've got some international stocks and bonds in my portfolio along with REITs and TIPS because the last two typically don't correlate with equities during crashes. I hope it buys me some extra stability during equity selloffs.

[@rob_berger]

And VBIAX is an index version of the 60/40: investor.vanguard.com/mutual-funds/profile/overview/vbiax

[@smacktonian]

Wellington fund is my biggest holding. It's pretty hard to beat!

[@bigtoeknee11]

FBALX is very similar to Wellington in allocations and returns. I think Wellington is still closed to new investors.

[@smacktonian]

It's not closed if you buy it through vanguard. I brought it and moved it over to Merril lynch and dollar cost average into it weekly.

[@smacktonian]

@@nbarbeer not since inception

[@matthewharrigan3568]

Another very informative video

[@techman7141]

Hello Rob , so is the 60/40 portfolio better than a 3 fund portfolio???

[@gojj8038]

You're referring to two different things. See Rob's vid on 3 fund portfolio: kzbin.info/www/bejne/oZ7aaYKmfNVlqK8

[@frankofva8803]

Thanks, Rob. Much appreciated.

[@ph5915]

Great video - as always!

[@JK-rv9tp]

I've decided to defer my federal pension to age 70, where it will be about 42% higher (in Canada), by using a couple hundred k in cash from my retirement savings to bridge the deferral period. The effect, from a lifetime guaranteed cash flow perspective, is similar to using the same money to purchase an annuity, except the payout is significantly higher than current annuity rates AND the payout is indexed to inflation with open ended indexing, something you can't get with an annuity at any price. My bridge-then-federal pension plus company DB pension brings my guaranteed income level to about 60% of total income when investment income is added on top, allowing me to go all-stock with a focus on hard asset cash flow holdings. A crash that causes a 60% drop in distributions/dividends will only lower my gross income by about 20-25%.

[@wdeemarwdeemar8739]

I am not worried one iota about the last 50 years I am worried about the upcoming 50 years. Well at least some of that. I am also a hospital based RN life expectancy is completely irrelevant. In those 30 some will spend hundreds of thousands in HC costs. Forget who they are even where they used to bank. I have had husbands who had millions but their wives could not get to it as the husband had a stroke or heart attack but did not actually die. Make sure you have a plan in writing for your family. Accounts numbers contacts. Be prepared but maybe that is just the Marine in me talking.

[@jamesdarnell8568]

To be prepared, you have to have a plan. And to have a plan, life expectancy is most certainly not irrelevant. I think I will probably check out at around age 85 but my plan assumes it will be 90. I get to spend a little more each year than if I had a plan to take me to 100, which is very unlikely. My second point is that you don't develop a plan when you are 65 and then stick to it until you die. You review your plan annually and adjust it as needed. If it turns out you will have some unforeseen costs related to long term care, then you will need to dial it back a little. If it turns out that your doctor tells you that you have two years to live, you may want accelerate your spending a little. Same if you win the lottery. You made a good point about a written plan though. You cannot tell people what your plan was after you are gone unless you write it down.

[@sitatatini2905]

@@jamesdarnell8568 i

[@christophercerny6943]

Rob, curious to hear what you think about portfolio complexity when it comes to bequests. That is, my spouse shows no interest in the details of what she will likely inherit from me. Like you, I've fought hard to eliminate debt and keep investing expenses low. Do I endanger all that hard work by leaving her a portfolio that consists of more than one fund when I could just leave it all in something like VBIAX or one of the LifeStrategy funds? In my mind, endanger in this case equals the possibility that she will find it too confusing and take it straight to a high fee shop when I'm gone. I have the details of everything spelled out for her in my estate documents and we've talked about it, but haven't seen a real interest yet from her in getting her head wrapped around it all.

[@ferg439]

Thanks Rob for another great video. For the 60% stock part, will you ever make a video on factor investing using ITFs and your recommendations on factor allocation (value, size, foreign mkts, profitability )?

[@rob_berger]

You bet. Excellent topic.

[@MrNoBSgiven]

Question: in your porfolio allocation, do you consider the value of your house as part of asset allocation? After all, it is part of anybody's net worth value, and it can be used as a source of leveraged income (reverse morgage, etc). Would you consider it as a replacement for REIT?

[@DavidEVogel]

do you consider the value of your house as part of asset allocation? No. A house is part or your "net worth" not "investment portfolio." You cant sell a house to buy groceries.

[@MrNoBSgiven]

@@DavidEVogel Sure. Why not? Admittedly, homes are very illiquid assets, but assets theirmare. Let's say, you have 100k of cash, you can buy stocks or pay offmthe remaining mortgage. Clearly a financial decision that affects your asset allocation. Is home you live in an income producing investment? Nope, but it can be converted to one. Let's say, owning a house which make up 60% of your net worth value. If you added 10% REITS to your investment portfolio, wouldn't this create a risk of asset overnighting to your net worth value? Think 2008. 🤔

[@aaront936]

@@MrNoBSgiven your house is a liability not an asset unless you're actively selling it.

[@johnbrown1851]

You can get a cash out refinance when you are 80 .. lots of spending money if your investments run out... you die before paying back all the money 💰💰💰. Or get a reverse mortgage. It does seem kinda like a shame to not have the equity working for you in some way.

[@RobertBucchianeri--Author]

Thanks for this. Could you give us some ideas about how you would structure a 60-40 portfolio using the 3 or 4 fund portfolio? Thanks!

[@k5map]

Rob - thanks again for another great video... in this one, you showed historical returns for Bonds. Can you provide the link to that graph or the steps one needs to follow to view it?

[@rob_berger]

I think this is what you are referring to: www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

[@Andrew21882]

How about 60% in total stock market instead in S&P 500. Wouldn’t that be a better option? Also returns on bonds have been a drag in recent years. Maybe keeping 40% in cash would work better instead.

[@Zorlig]

As you noted bond yields are very low for high quality bonds, so to expect anything like historic bond yields you need lower rated higher yielding bonds. Maybe something like VWEHX. Investing in treasuries is just a market timing cash drag ploy that doesn't work.

[@rob_berger]

It's definitely a problem. One thing I neglected to point out, however, is that while bonds go down in value when rates rise, we do at the same time benefit from the higher rates. It takes time, but eventually the higher rates offset the loss of value on the bonds.

[@moosesmart]

Thanks for the video. I’m currently at 50/50 but want to transition my retirement funds to 60/40. Should I do this gradually or all at once? I’m thinking the market maybe over valued. Also I’m 61, very close to retirement, and hoping to live well into my 90’s.

[@garya2223]

The "experts" will tell you that you should do it all at once (i.e. "lump sum"). This has been studied and the data supports that recommendation. However, it probably doesn't make a lot of difference how you do it, and doing it gradually (dollar cost averaging) may give you some piece of mind of the market takes a dump while you're doing it.

[@geoffgordon9569]

Agree with Gary. Dollar cost averaging is the way to go.

[@OkOk-vu7ch]

Thanks for the great video. Does investing in VBIAX equal to a 60/40 portfolio? Is it better than your 3 Fund Portfolio: VTSAX, VTIAX and VBTLX?

[@danielyang4707]

VBIAX has 16 % bonds in it.

[@randymattison8076]

@@danielyang4707 37% bonds

[@alleneverhart4141]

MNU!

[@bertsadventures9974]

Hey Rob! New to your channel and really like your approach. At what point or age do you recommend investors to make this shift from a more aggressive stance to something as conservative at a 60/40?

[@DavidEVogel]

What is your time horizon? More than 5 years until retirement you should be 100% equities. Less than 5 years a percentage in fixed-income securities.

[@bertsadventures9974]

@@DavidEVogel I'm 90/10 today with a 7-10 year horizon. Have 6x my income saved today in 401k

[@thomaslee7189]

Is it possible to project how much is left after 30 years from 100% stock vs 60:40 with 4% withdrawal each year?

[@rob_berger]

There are studies that show this. Here's one of them: (Exhibit 1, p. 8)--blog.iese.edu/jestrada/files/2015/08/Glidepath-2.pdf

[@johnbrown1851]

Do you think a 70/30 portfolio would be better than a 60/40 ????

[@swright5690]

Great content but I wish your videos were a bit shorter. 30 minutes? I have to watch your content at 2x speed.

[@rob_berger]

Yeah, I hear you. But I want to provide a lot of detail so folks can understand my reasoning and then do their own research. Perhaps I can try a 5 minute summary at the start, followed by more detailed explanation.

[@aaront936]

@@rob_berger your video lengths are perfect for my commute. Thank you.

[@michaeld4090]

Why not do 100%? You make a lot more $

[@rob_berger]

True, over the right time period. In retirement, however, the volatility could be a problem, particularly if you retire just before a significant bear market.

[@michaeld4090]

@@rob_berger ok

[@Jesusismykin]

👍😊

[@ccrespo80]

what about cryptos?😅

[@marklydon435]

Mr Buffet is looking at a 90/10 split for his wife when he pops his clogs. Might this be a nod to these artificially low bond yields currently.

[@PH-dm8ew]

so that's a 3 in 4 chance to not live past 90 and a 9 in 10 chance to not live past 100. LOL investing is a lot like gambling, odds are the only reality.

[@MRkriegs]

100% Stocks are better. Max draw down is a flawed metric

[@webentwicklungmitrobinspan6935]

its not better. the returns per unit of risk is higher. this increased the median outcome for the investor and the bottom 10% of outcomes. by your logic 300% Stocks are better. which they are on average, but the median loses money over the long run.

[@cesarpenailillo6627]

Thank for the video. Very informative!