Challenges for the 60/40 Portfolio Strategy: Exploring New Investor Approaches
Key Takeaways
- A new National Bureau of Economic Research (NBER) study shows that the old 60/40 rule can cost the average investor significantly more over their lifetime than newer, tailored strategies.
- Static 60/40 portfolios ignore differences like age, job security, income, and savings rates that shape how much risk you can take.
- Your career matters: if your paycheck tends to rise and fall with the stock market, you may need less stock in your portfolio.
For decades, the 60/40 portfolio—60% stocks for growth, 40% bonds for safety—was treated like a golden rule. But new research shows it may actually be draining your wealth. A new NBER study found that sticking with 60/40 could cut your lifetime spending power by nearly 4%…
