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The 60/40 Investment Mix is Dead – Or Is It?

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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.

As usual, my co-host will be financial journalist Miranda Marquit. Listening in and sometimes contributing is producer and novice investor Aaron Freeman.

Sit back, relax and listen to this week’s “Money!” podcast:

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Show notes

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