What Is the 60/40 Asset Allocation Rule?

The mainstay strategy of investing 60% of your portfolio into stocks and another 40% into bonds is not only outmoded, but also does not generate enough income for many people as lifespans have increased.
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The mainstay strategy of investing 60% of your portfolio into stocks and another 40% into bonds is not only outmoded, but also does not generate enough income for many people as lifespans have increased.

This strategy of investing for your retirement has become more of a rarity as inflation can easily erode the buying power of investors.

The 60/40 rule was created when bond yields averaged 8% and the stock market 12%, said Bill DeShurko, president of 401 Advisor, a registered investment advisor in Centerville, Ohio.

"The obvious current problem is that while bonds provide crash protection, they are pretty much dead weight in terms of portfolio performance," he said.

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