Is there any point in the 60/40 portfolio?
Discussion
Phooey said:
If returns on bonds are negative due to inflation, is it time to ditch the 60/40 portfolio, or stuff like Vanguard's Lifestrategy 20-80 offerings. And if so, what do you replace 'bonds' with?
You are then getting into the realms of tactical asset allocation which, in common with most forms of "fiddling", tends to give suboptimal outcomes. If you ditch bonds, when would you consider getting back into them?
hairy v said:
CheersFound this too just now - mentions bonds from 1:25m https://ritholtz.com/2022/03/if-you-sell-now-when-...
Phooey said:
or do you think there are better alternatives in the near and present future?
It goes back to my point about tactical asset allocation - you've got to look at what has worked over the long term rather than trying to be smart and juggle something that might be better in the short term.What long term returns do you need for your plan to be a success?
For each of the assets classes in your current portfolio, what growth assumptions have you made? Is there a genuine shortfall?
Bonds giving muted returns over the next few years is a long, long way from the worst-case outcome we have historically experienced.
" In the period between 1914 and 1920, UK bonds lost over 60% in real terms over seven consecutive years."
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