When I wrote my first book, “Life or Debt,” more than 20 years ago, I had a simple solution for investing your long-term savings. It was to subtract your age from 100, then put the resulting percentage in stocks. The rest you’d divide into two equal parts: an intermediate term bond fund and a money market fund.
If you were 40 years old, for example, you’d subtract 40 from 100, and put the resulting percentage, 60%, in stocks. The remaining 40% would be divided between bonds and money market funds.
An even simpler way of investing long-term savings, and one that’s been around for generations, was to simply put 60% of your savings into stocks and 40% into bonds: the classic 60/40 portfolio.
But as it turns out, nothing lasts forever, including these simple diversification guides.
What happened? You probably already know. What happened was interest rates, namely rates that have been so low for so long that money in bonds and money market funds is earning basically nothing. Which means it’s also not keeping up with inflation.
So what’s an investor to do? That’s what this week’s “Money!” podcast is about. We’re going to explore whether the traditional 60/40 investment mix is really dead, or just waiting for its triumphant return. We’ll also discuss newer potential investments to modernize your portfolio. And we’re going to do it without making your eyes glaze over.
Sit back, relax and listen to this week’s “Money!” podcast:
Don’t listen to podcasts?
A podcast is basically a radio show you can listen to anywhere and anytime, either by downloading it to your smartphone, or by listening online. They’re awesome for learning stuff and being entertained when you’re in the car, doing chores, jogging or, if you’re like me, riding your bicycle.
If you haven’t listened to our podcast yet, give it a try, then subscribe. You’ll be glad you did!
Want more information? Check out these resources:
- Why Traditional Retirement Investing Is Broken
- Barron’s: The 60/40 Portfolio Is Dead. Here’s How Advisors Are Replacing it.
- Bloomberg: The 60/40 Portfolio Isn’t Dead, Just More Expensive
- Yahoo: The 60/40 rule of investing is dead, experts say — it’s time to get more creative
- Kiplinger: Is the Traditional 60/40 Portfolio Truly Dead? Or Just Hibernating?
- U.S. News & World Report: The 60/40 Portfolio Is Dead for Retirement Planning
- MarketWatch: Is the 60:40 portfolio really dead?
- Seeking Alpha: The 60/40 Portfolio Is Dead: What Comes Next?
- Money: The Classic 60/40 Investing Strategy Could Now Be Working Against You
- Bloomberg: Unloved 60/40 Strategy Needs a Modern Makeover to Win Over Skeptics
- CNBC: Traditional 60/40 portfolio has actually reached its expiration date
- Stacy’s stock portfolio
- Subscribe to the Money Talks News newsletter
- Take our course The Only Retirement Guide You'll Ever Need
- Take our course Money Made Simple
- Miranda Marquit’s website