When I became an investment adviser more than 40 years ago, there were a few tried-and-true rules for where to put your long-term savings.
For example, subtracting your age from 100, then putting that percentage of your assets into stocks, the rest into bonds.
Another popular rule was the 60/40 rule: 60% of your savings in stocks, 40% in bonds. The idea was to achieve growth with the stock portion, and income with bonds.
These simple ideas worked for generations. But they don’t work so well anymore.
Why? Because bonds are no longer a safe, reliable income-producing asset. Interest rates are laughingly low, and should rates rise — about the only direction they can go from here — bonds, especially long-term bonds, will take a sizable hit. (Bond prices move inversely to interest rates.)
So, what should investors be doing, especially those approaching retirement? That’s the topic of this week’s “Money!” podcast. We’re going to explore some ideas, see if the 60/40 formula is truly dead, and if so, what we should be doing instead.
Sit back, relax and listen to this week’s “Money!” podcast:
Not familiar with podcasts?
A podcast is basically a radio show you can listen to anytime, either by downloading it to your smartphone or other device, or by listening online.
They’re totally free. They can be any length (ours are typically about a half-hour), feature any number of people and cover any topic you can possibly think of. You can listen at home, in the car, while jogging or, if you’re like me, when riding your bicycle.
If you haven’t listened to a podcast yet, give it a try, then subscribe to ours. You’ll be glad you did!
Want more information? Check out these resources:
- How to Earn More Money on Your Savings
- MarketWatch: Should I still use the 60/40 investing rule for retirement?
- Money.com: What Rising Interest Rates Mean for Your Bond Funds (Hint: It’s Gonna Hurt)
- Bloomberg: Death of 60/40 Portfolio Makes Returns Harder for Funds
- Investopedia: Why a 60/40 Portfolio Is No Longer Good Enough
- Subscribe to the Money Talks News newsletter
- Take our The Only Retirement Guide You’ll Ever Need course
- Take our Money Made Simple course
I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.