The Classic 60-40 Investment Strategy Faces its Most Challenging Year in Decades

Posted on November 20th, 2023 at 11:40 AM
The Classic 60-40 Investment Strategy Faces its Most Challenging Year in Decades

From the desk of Jim Eccleston at Eccleston Law 

Millions of Americans are experiencing disruption in their retirement planning due to rising interest rates and inflation.

For generations, financial advisors promoted the 60–40 strategy as the ultimate investment approach for ordinary people. The concept is straightforward: holding stocks during prosperous times aids in wealth accumulation. When stocks experience a downturn, bonds usually offer a more stable performance, softening the impact.

However, that is no longer the case. The reliable 60–40 portfolio experienced a 17 percent loss last year, marking its worst performance since at least 1937, as reported by the Wall Street Journal.

In response, advisors are considering other options. Those include money-market funds over bonds or substituting a portion of their S&P 500 allocation with international stocks or shares of smaller companies. Other advisors are exploring alternatives to stocks and bonds, often involving riskier investments with higher fees. Those alternatives include real estate, commodities, or corporate loans.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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