For decades, the 60/40 portfolio—60% in stocks, 40% in bonds—was considered the gold standard for balanced investing. It aimed to provide growth while cushioning downturns with fixed income. But in today’s changing economic environment, many investors are asking: Does the 60/40 still work?
Our view? The traditional 60/40 portfolio is no longer enough.
What’s Changed?
Over the past few years, we’ve seen:
🚨 Stocks and bonds falling together – Inflation and rising interest rates led to one of the worst years on record for both asset classes in 2022.
🚨 Rising rates hurt bonds – Bonds, once seen as a safe haven, struggled in a world of rapid rate hikes.
🚨 Investors looking for better income – With cash and term deposits offering high yields, many have questioned whether they need bonds at all.
However, inflation has now come down, and interest rates are actually falling in many parts of the world. While this is good news for bonds, it doesn’t necessarily mean a return to the old 60/40 approach.
Why 60/40 Still Isn’t Enough
Even as rates decline, investors face a different challenge: markets have changed, and portfolios need to adapt. Instead of blindly following a 60/40 split, portfolios should be built around your personal financial goals and market realities.
✔ More Asset Classes – Alternative investments, such as infrastructure, private credit, and real assets, can provide diversification and inflation protection.
✔ Flexible Income Strategies – As rates fall, term deposit yields will decline. Investors need smarter strategies for generating income.
✔ Customised Risk Management – Everyone’s risk tolerance is different. Portfolios should be tailored to your specific situation, not based on outdated formulas.
Would You Take the Same Medicine as Everyone Else?
Think of investing like your health. If everyone had the same financial situation, we’d all be prescribed the same investment mix—just like if everyone had the same illness, we’d all take the same medicine.
But that’s not how it works. You wouldn’t take a random pill without seeing a doctor to assess your personal health needs. So why invest without considering your own goals, risk tolerance, and financial situation?
This is why personal advice matters—it ensures your portfolio is built specifically for you, rather than relying on outdated, one-size-fits-all solutions.
Final Thought
The 60/40 portfolio is no longer the reliable solution it once was. While falling interest rates might make bonds more attractive again, a modern portfolio needs to be flexible, diversified, and tailored to your needs.
💡 Wondering if your portfolio is still right for you? Just like you’d see a doctor for your health, getting the right investment strategy requires expert advice. Book a chat with our team today to ensure your investments align with your financial goals and today’s market conditions: financialsuccess@simonwu.com.au