The 60/40 Portfolio is Alive and Well | Here's Why

Many claim that the 60/40 portfolio is dead. They argue that because of interest rates, inflation, and bond returns this year, a retiree should no longer rely on a portfolio of 60% stocks and 40% bonds.
Here's why I believe that the 60/40 portfolio is as valid today as it has ever been.
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#60/40portfolio #retirement #robberger
ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.

[@billrailsback5176]

Excellent- the fact is that NO strategy will be in favor every single year. A lot of people probably scrambling to adjust their portfolio this year, may be surprised that as soon as they complete it the news will change and they will be poorly positioned. Choose a strategy and stay the course.

[@tennnis498]

Exactly.

[@Byssbod]

Buy assets that are low it's not hard to react to the market. Buy VTI when it's low or buy bonds when they're low.

[@lordcowboy03]

Don’t time the market

[@mcchang1032]

You're really killing it with that outro, nice!

[@gben2457]

Thanks for the video, I agree.

[@drinksomewhisky]

Rob, so glad I found your channel. Instantly subscribed and turned on notifications. Please keep these videos coming.

[@HB-yq8gy]

Thanks, Rob another great video it's crazy how smart people pay some one to invest their money.

[@dmsoundcollective6746]

Thanks for making that clear ;)

[@pfreeburn]

Good information Rob... Thanks!

[@frankofva8803]

Thanks, Rob. This is why you are my “go to” resource on my retirement investing. So logical and reasonable.

[@josh9231]

Smart video Rob, I like how you cover a topic from as many angles as possible it answers our questions , helps us learn, thanks. Keep up the good work!

[@fhowland]

Best finance channel on KZbin. Glad I stumbled on you!

[@michaelb.3438]

60% Stocks/ 40 % Bonds Historical Risk/Return (1926-2020) Average annual return 9.1% Best year (1933) 36.7% Worst year (1931)-26.6% Years with a loss of 22 of 95=20.9% Take care and God bless

[@joekuhnlovesretirement]

Excellent content as always

[@charleswhite3759]

Hello Joe!

[@noreenn6976]

Thanks for watching Joe!

[@corralescruiser8957]

I sold all my bond funds a few months ago. Bond funds and individual bonds are different animals. Started buying individual short term investment grade corporate bonds paying 6 percent. Also bought various CDs paying 4 to 5 percent for 2 and 3 years. Until the Fed is done raising rates, I'm staying away from bond funds.

[@jamesmorris913]

I think that bond funds should ALWAYS be avoided. Yes..purchasing individual bonds is a bit more of a hassle, but there is plenty of info out there, on how to do it. I made the switch away from bond funds, about two years ago, and I'm INCREDIBLY gladl that I did!

[@stevenharris6626]

Agree......individual bond (short term) also allow you to change things if you want, and as you say you get a higher percentage return!

[@jimclark5037]

Excellent!

[@robinspanier7017]

i am 26 and i never invested in 60/40 until this year. I am happy to get something in return from the risk i am taking with my bonds.

[@joeburns3302]

Excellent well thought out video. Thanks Rob but how dare you remove Rom! Where is the space knight?

[@ChiY327]

Thanks. I’m holding onto mine, but my bond 40% is much more diversified between short term, TIPS, junk , and preferred stocks (ISTB, SCHP, EIBIX, PFFV) I am currently retired

[@michaelgriffin7889]

Bring back the messy shelf, Rob!

[@tphillips777]

Would love to see a video how one might assign their asset allocation by age.

[@Random-yq1wu]

Perfect time to start 60/40 portfolio.

[@70qq]

ty

[@mattcornell6665]

I agree with your overall point Rob and thanks for the positive spin on what this means moving forward. We do need to acknowledge though that this year has been the worst year for 60/40 since 1937. It's worse than 1974. So the worst year in the last 85 years. That is a very long damn time. So the worst year in our lifetimes. That basically means that for the 401k, this is the worst year ever for 401ks since they haven't really been around that long. But I agree that the 60/40 is not dead

[@Random-yq1wu]

Equity market crash happens more often than bonds. Bonds will always have a place.

[@jw8578]

Dramatic title on the WSJ title but it is true that bond performance typically provides a buffer to negative returns in stocks. Not this time...

[@johngill2853]

More accurately not this year. I hope nobody was holding a 60/40 portfolio for a one-year time period

[@stephenlupi4547]

I'm down

[@kckuc310]

I’m about 60/40 and not in bonds, bonds suck. 60 in etf and mutual index funds S&P and other in 5 percent money markets

[@montehart1098]

I have been retired for 5 years and have settled on a portfolio that is maintained at 45% US stock funds, 15% ex-US stock funds, the remainder being bond funds and short-term reserves. The equity sleeve is predominantly Total Stock Market Index and Total International Stock Index. As a slight modification to market weighting, I target between 5% to 6% each of International Dividend Appreciation Index, Real Estate Index, and Small Cap Value Index. I rebalance as often as it seems favorable and use a similarly composed proxy ETF portfolio as a daily price change guide. My thinking is that rebalancing more often than generally recommended takes advantage of short-term market fluctuations which has a significant long-term accumulative effect.

[@philly1776]

I am 61 yrs old and 100% in an S+P 500 ETF. Thankfully I do not need to tap this money....love to watch the dividends roll in every 3 months. Passive income is a lovely thing.

[@davidbrooks8809]

You do know the dividends is not extra cash.. it lowers the value of your stock it is not extra money

[@TonyCox1351]

@@davidbrooks8809it’s not extra money, but it’s consistent money. If your stocks dip 25%, your dividends are not likely to dip 25%

[@macman4593]

Hi Rob .....I'm in New Zealand...in regards to Bonds would you go with local New Zealand government bond or a total world bond fund .Thanks for your help on this .

[@tekootianderson]

Kia ora Mac*. Rob's on my favourite bookmark too. Go the Black Ferns 🤣😆

[@BryanColliver]

I am 43 and still dont do bonds i am 80% in growth ETF and 20% in dividend ETF and have been for over 10 year now doing just fine now.

[@stevenharris6626]

Thats great for someone young, but as I grew older (I'm 65 ) I have a 50/50 portfolio and feel much more comfortable. It totally depends on risk tolerance. 👌

[@scottdaytonhunn]

So a Balanced fund like Vanguard VBIAX or Fidelity FBALX is a good option for someone who is 10 years out?

[@gscottfuller]

Rob - a little off topic but would you consider a discussion of adding exposure to European stocks given how depressed their valuations are vs. US Stocks? They also have strong dividends. Great article in the WSJ today by Eric Wallerstein that discuses how Euro stocks will perform better over the next decade than US stocks. Obviously Vanguard has several ETF's like say VEUSX. Any thoughts appreciated. Love your channel and just got your Blue Book!

[@Byssbod]

I'd rather buy European index funds than bonds any year tbh

[@3662mick]

Could you just invest in vanguard wellington ?

[@jessicamamikina7648]

Retirement is wonderful if you have two essentials - much to live on and much to live for. Invest wisely and get good returns.

[@jamesmaduabuchi6100]

thank you, can you give a pointer the best investment now ? i am thinking of getting stocks or crypto

[@jessicamamikina7648]

The key to making money in stocks is not to get scared out of them. An important key to investing is to remember that stocks are not lottery tickets. get a financial assistant

[@yuikiyoshi1248]

I think this is also a great time to invest in private equity and crypto. Can you give a pointer ?

[@jessicamamikina7648]

I currently work with Karina Mattis a financial expert i met in a seminar

[@alphamale2363]

Wishing I had put the 40 in my 60/40 into CD ladders instead of bond funds.

[@aecabanas]

Can you explain why CD ladders vs bond funds?

[@renewhite2199]

@@aecabanas good question

[@alphamale2363]

The value of a CD, if held to maturity, never goes below what you paid for it.

[@tennnis498]

True. I never would have expected that “stable” bond fund prices would have fallen through the floor when the stock market went down.

[@alphamale2363]

@@tennnis498 In the long run I think my fund will be ok (duration ~6 yrs) but watching my portfolio drop so much has been stressful. Peace of mind has some value.

[@milanjurich1526]

2/3 NTSX plus 1/3 DBMF … 60/40 plus Managed Futures

[@WingTang-em9gz]

I am currently retire with wife still working and I have 80/20 and is planing to go to 70/30. Rob, I know you have something similar to what I have. Can you please share the reasons why you are not doing 60/40 even in your video you said the 60/40 portfolio is sill alive and well?

[@BLR653]

Rob why do you have to be so cold and calculating? I mean sticking to the facts and all! Much more fun to be hyper dramatic. It’s the end of the modern portfolio and all! Sadly fear sells in the news and financial media and even the WSJ gets into it at times. Keep up the great videos.

[@cathya222]

@Rob_berger but are bond funds dead?

[@HB-yq8gy]

How do you know it's a bot reply seems hard to ID sometimes?

[@fhowland]

What about corporate bonds instead of only treasuries?

[@Kimmer]

Can't believe the number of people who are missing the big picture on having a stock/bond allocation model. They are panicking because stocks and bonds have fallen together when generally they have an inverse relationship. The value of bond funds have taken a big hit because of rising interest rates, but will begin rising because of earning higher dividends. Study after study shows that a 60/40 or 70/30 allocation does very well with much less risk than a 100% stock allocation or trying to time the market and buying cash. Those who are bashing bond funds will eat their words as bond funds begin to do well and fulfill their purpose of balancing the risk of stocks. A 100% stock allocation only makes sense for those with a long time horizon before needing that money - not for those near or in retirement.

[@FatherGapon-gw6yo]

If I am beginning to understand correctly, the return of a bond fund should be the coupon as dividends-not its price which moves with the rate?

[@Kimmer]

@@FatherGapon-gw6yo Yes, you are correct. When interest rates begin to fall, bond funds will increase in value. While interest rates are high, they are paying higher dividends. I've never been a big fan of bond funds, but I have become convinced that they are important as we near or are in retirement.

[@VV-lr7xe]

Do I live in a different reality? Bond, bond funds are -8 or -9 territory for 5 years. Defensive asserts ? Nuts!

[@bentackett6299]

I don't know, I feel better with the 61-39 portfolio

[@johnbeeck2540]

Ben, I'm a little more aggressive at 62-38 ;-) Thanks Rob for another great video!

[@bentackett6299]

@@johnbeeck2540 woah, risky!! 😁

[@jmc8076]

Contrarian.

[@hhuuzzzzaahh]

all the cool kids now are 69-420.

[@jeffb.2469]

Or, just put it on autopilot with the Wellington Fund (65/35) and be done with it.

[@jmc8076]

I see your point but don’t fully autopilot any investment. If there are large gains/losses in a short time period, key life changes etc then things need to be reviewed. Also rebal 1-2x per yr.

[@hhuuzzzzaahh]

@@jmc8076 my understanding is that the best results arrive when you leave things alone. autopilot will continue to buy when things do down. human pilot will sell. one of those makes money over time. one of those loses money.

[@marklydon435]

If you guys in the USA think the dollar is going to keep weakening then it might be a good idea to look at getting some international and emerging market exposure in the local currency.

[@luisoncpp]

The dollar is becoming stronger than other currencies, you can make the case that all currencies in the world are becoming weaker(including the USD), but that wouldn't make a good case for seeking exposure to other currencies

[@jmc8076]

@@luisoncpp Prob won’t stay that way. Fed running of liquidity/bal.

[@jmc8076]

Yes many good sources have said next 5-10 yrs good for EMs esp India, Brazil and S. Africa.

[@aaront936]

Bnd is down 14% ytd and voo is down 17% I'll pass on bonds

[@cathyg1099]

I built a short-term bond ladder with extra cash. A little more work, but I prefer that to a bond fund.

[@tennnis498]

CD Ladders are looking good, and money market is reviving. Interest rates were rock bottom and that was seen in bank interest, loan and money market rates. So, the valuation of money is going up and inflation is cooling.

[@aaront936]

@@tennnis498 I have a bridge to sell you if you think inflation is cooling.

[@jmc8076]

@@aaront936 With good swamp land for building? 😂

[@hanwagu9967]

i think the argument is that you are looking at a 50 year period to present, while the 60/40 contrarians point to the bear markets starting in 2000. You didn't plot from 2000 to present, so that would be something interesting to see.

[@johnm2178]

Could you please elaborate on your comment that you like REITS in a portfolio?

[@georgegarner3502]

I prefer the 40/60 portfolio with dividend income

[@supersteve8305]

I must be a risk taker. I'm 57 and retired 18 months now. I can't imagine having 40 percent in bonds. I would rather have 40 percent in something that can't go down. Perhaps a CD later or treasury ladder, but something more on the guarantee side. I would be apt to have 100% stocks than a 60/40 with bonds. If I'm gonna pass on stocks, it's to lock in a guaranteed return on the 40. Just me.

[@Ladran_Sancho]

"I would rather have 40 percent in something that can't go down." Can;t go down in nominal terms, but it goes down in real terms due to inflation.

[@BLR653]

@@Ladran_Sancho exactly and this nominal loss is a true risk

[@supersteve8305]

I agree, but bonds can do both. Go down AND lose value. I'd rather not take that risk for a bond. Edit: lose value to inflation.

[@tennnis498]

Yeah, but instead of selling bonds that have lost price value, I’ll hold because they are going to have to come back up. But it has changed my trust level - especially since it wasn’t expected for them to fall at the same time as stocks.

[@johngill2853]

I'm sorry but those treasury securities you have can and do go down in value. Bond funds are not for every goal if principal protection is your goal then they're not for you.

[@olfart7902]

don't forget to add 7% annual inflation rate to -16% 60/40 portfolio.....so -23% real....from early 80's to 2008 and 2020 we had rates go from approximately 20% to 0% +QE which means negative rates.....that's what made the 60/40 portfolio work so well....I wouldn't expect that in the future.

[@jmc8076]

Many see rates going down maybe mid-late 2024. BlackStone CEO talked about 2020s being a ‘lost decade’ w/extended flat growth in US and other countries.

[@ljrockstar69]

What type of Bond ETF would be good for a ROTH IRA?

[@bribradt3450]

If you absolutely have to have bonds in a Roth....BND is good

[@gieb6428]

I am 73yo and at present 11% gold 2% foreign stocks 87% treasuries and mm ---- Just sitting here waiting to buy --- Then I will be 11% gold 50% stocks (defensive) 50% (corp bonds, treasuries, munies, mm, what ever is paying) ---I don't live off my investments but when I'm gone the wife will use some

[@donburbank593]

I'm 59 with less than $52k saved in 4 01k so not thinking of retiring till 70. Got 80%/20% in Large Caps/Smalls Caps Funds. Plus IBonds starting this year..... That's risk taking

[@aaront936]

80/20 large/small performs about the same as a total market index like vti.

[@donburbank593]

Yeah my plan doesn't have a total mkt index 😶

[@genetown1960]

Hi Don, You will get there, be consistent in your investing. Workout your budget to maximise your investment contributions and don't let people cause you to self doubt. Be patient and keep learning.

[@aaront936]

@@donburbank593 tsp?

[@masoncnc]

2022 marks the worst bond performance since 1842. By the dip?

[@beauneo]

I recommend it. If you’re not buying treasuries directly through your broker, I’d do that instead. 3 month tbills pushing 4.5%.

[@masoncnc]

@@beauneo mmm. Yeah. Good place to park funds while the market figures itself out.

[@gieb6428]

What happened in 1843 ?

[@alphamale2363]

Bad bond years are typically followed by good years, so the historical odds are good.

[@johngill2853]

I would follow my plan and not time the market. It's fine if it means rebalance to your desired asset allocation by all means you should do that but if by the dip means time to market, I think you'd be better off forming a plan first

[@tomdiblasi7840]

Rob, I am thinking about adding some diversity to my portfolio....what do you think about FTX? :)

[@Han-es8qu]

But this time is different, bond prices will do badly in 22,23 and 2024.

[@phd_angel4192]

@rob_berger - Hello Rob - Would you know of any online tool that reports all company stocks under all of my ETFs combined? For example, I have Apple across a few ETFs but don't know how much of my overall portfolio is Apple. Besides calculating on Excel, is there an online tool that can report the overall percentage of companies in my ETF portfolio? Thank you.

[@MarketAndChurch]

Rob, I've watched a lot of your videos, and thank you for your advice. I want to know if you have any words of encouragement for those of us who can only invest $200-$500 a month because we live paycheck to paycheck and don't have a lot of money, and feel bad about the fact that we can't contribute as much to our portfolios as others can. I'm in my 30's so I have a while before retirement, but I just don't feel confident that my small monthly investments will amount to much. Is there hope for us small investors? I'm maxing out my Roth IRA, and putting the rest into either an HSA fund or a SEP-IRA using a 6-fund portfolio.

[@Random-yq1wu]

$350, 12 times a year, for 20 years will be 300K to 400K $350, 12 times a year, for 30 years will be 1 Million plus

[@MarketAndChurch]

@@Random-yq1wu Wow, I feel so much better haha. That's good to know that my small investment over time can make a difference. Thank you so much.

[@rob_berger]

$200 to $500 a month is HUGE would invested over time. My advice? Keep up the good work!

[@MarketAndChurch]

@@rob_berger Thank you Rob!

[@MarketAndChurch]

@Craig I think that's a great way to think about it, thank you.

[@chuckmurray1825]

Rob, Why would anyone be in bonds at this point? We have 90-day T-bills and Money Market Funds yielding close to 5% with no risk? Bonds continue to track the stock market instead of moving inverse to stocks. Bonds will continue to drop as interest rates go up just like equities. It just does not make sense to me to have anything invested in bonds for 2023 until the Fed signals that it will stop raising rates. I'm changing my portfolio to SCHD, VIOV and doing 50% in Money Markets and T-bills and a smaller percentage in emerging market stocks. I don't see the first three quarters of 2023 being any better than 2022. Tell me why I'm wrong.

[@robinspanier7017]

because the market is always right and valuations for the biggest market in the world might be more correct then your assesment

[@sarahsunsetpark]

@RobBurger, Your Clickbait comment, I have to respond to your comment. The Wall Street journal, Is owned by Murdoch. This probably has more Clickbait headlines than most other newspapers

[@MarketAndChurch]

But it's still a great paper, even if it happens to be owned by Murdoch.

[@ronschuetz4566]

What changes have you made to your personal portfolio in the last year?

[@malaybasu961]

What is dead is not 60/40 portfolio, but bond funds. It makes no sense at all to invest money in bond ETF/MF. It has no upside beside convenience, only downside. No knowledgable investor should invest in bond funds. In fact bonds funds are more riskier than leveraged ETFs. Not sure why vanguard doesn't coution people while buying into bond funds. You should make it very obvious that bond funds are not bonds. The whole finance industry is upside down. Avoid all bond funds like plagues, including any balanced funds that has a bond fund inside. In a climbing rate environment, bond fund lose, in a reducing rate environment, thy are slower in growth than stocks. They lose in upside and also in downside. In short, the most ridiculous financial invention ever..

[@aaront936]

Peter lynch called out bond funds back in the 90s.

[@cathyg1099]

I'm right there with you. I have a bond ladder and sleep well at night.

[@supersteve8305]

I agree. If you need bonds, buy individual ones and keep them full term.

[@malaybasu961]

@@aaront936 Very true! It makes no sense to invest in bond funds, when purchasing bonds have become so easy with any brokerage.

[@alphamale2363]

I'm coming around to your way of thinking.

[@bradleys4941]

you LOSE money in bonds...bond funds...when interest rates go UP lol

[@davidless57]

I feel an investor needs to have a long term risk bucket in their portfolio also, that is if they don't want to live on a fixed income of 40 grand, which is poverty level IMO. ETF indexes are good for one particular bucket but shouldn't occupy the entire equity bucket. You need good equities such as tesla and other high long term growth money makers (we are living in the age of disruptive technology). If a person (investor) is taking the time to do their own investing (great for him) then they need to take the time researching good long term growth funds. There is a lot of great youtube info on them so there is no excuse for not being knowledgeable. I like your channel, it gives me a different perspective on investing.

[@elsemuller2460]

Mr.Berger, i like your show, but i don't like your setting a t a l l . The "retirement-beige" on the walls makes you beige as well, pics do not go well too. Especially right behind your head. What about some fresh, uplifting colours? Or, as before, a perspective into a room instead of a wall right behind you, associated with being trapped in a room ;-) Nevertheless: very interesting numbers you presented and good perspective for retirees . I wonder if it would work for europeans as well - with currency risk . Or how a global portfolio would have worked out for US Citizens?

[@dans9228]

Some investors said that VTI will never be the same fund. Seeking Alpha has VTI ranked in subclass 58 out of 147. VTI is also ranked 205 out of 496 in the ranked asset class. Would you still use VTI in your 2,3,4 fund portfolio??

[@matthewmenghi5690]

Maybe watch robs aug 21 video, " index funds are for losers" might help you decide?

[@dans9228]

ok

[@lorismith7976]

It appears you like to play games for leisure, me too!! Try twinspires for horse racing. In my retirement, I've educated myself and LLLOVE IT. I've strategized to bet "show" on the favorites, bet $2 and win $2.40 it's thrilling! Bahaaahaa🤣