Investing works and works – common sense wealth
Back in 2019 I wrote a eulogy for the 60/40 portfolio:
The 60/40 portfolio was transferred on October 16, 2019, from problems with low loan rates and a serious fraud case. This is the 27 60/40 period that died in the last ten years but the enemies of time marketing, day traders, and other funds hope to stick with this.
I couldn’t help you. Financial sources are kept announced every year.
Low bond yields have made it more difficult for investors looking for balanced portfolios.
When I wrote my Eulogy the 10 year Treasury yielded about 1.5%. It can go down even during the first days of the epidemic below 0.5%.
Then interest rates range from as low as 5% or more. By 2022, it actually felt like the 60/40 portfolio was dead. Hit by a truck in one of the worst years forever through the combination of stocks and bonds.
The good news is the short-term wealth and money that has come in to help the income side of things but I understand why many investors are reluctant to be alone after that blood.
If you have invested in a Bond market fund you have experienced income
In the 2010s when bond yields would enter such lows, they were pulled out of the risk curve but also headed for a more complex curve. There is a perception among some wealth managers that you need alternatives, profits, private funds, etc. Success.
I’m not completely opposed to those kinds of investments. They are not ideal for most investors but for those who understand how they work and how to invest sensibly these types of investments can work.
But introducing too much complexity into your portfolio can make it more difficult to manage. The higher the fee, the more illegal it is, the more difficult it is to renew, and there is no obvious covert. You have to know what you are doing when you go in without simple portfolios even when you may not be satisfied with the results.
Having said that, it’s a holocaust for the Bond Market. Bonds aren’t a knock out of the park because bonds are an investment. But from the year 2022 higher yields have led to slower and stronger gains.
And if you’re looking at something like the Vanguard Fund Simple Portfolio
International stocks rose 30%. US stocks are up almost 20%. But look at the bonds – up about 7%! That’s a good income year.
Totally invest in a 60/40/40 fund portfolio1 nearly 16% by 2025. That’s good.
This portfolio increased by 7.8% per year in the 2020s. That number represents the biggest bond market risk in history.2
The 60/40 portfolio wasn’t dead, just full for a year or two.
Boring is still good when it comes to investing.
Michael and I discussed transparent portfolios with fields and more in this week’s spiritual paper:
https://www.youtube.com/watch?v=2abx3tlgttu
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Further reading:
60/40 portfolio eoogy
Now here’s what I’ve been reading lately:
Books:
140% US stocks, 20% international stocks and 40% bonds.
2This portfolio was down 16% in 2022.
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