Is this investment strategy still valid or old school


If not, what is a more modern strategy?

txaggie_08 said:

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Sounds pretty high on bonds, unless you're close to retirement and pretty risk averse.

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I'm 55 yrs old and have 19% in bonds. Considering going to about 22 to 25% while yields are high.


That said I've always read seen mentions of the traditional 60/40 portfolio

Do you think the bond rate will keep up with future inflation?

Mas89 said:

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Do you think the bond rate will keep up with future inflation?

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Hard to say. Guess that depends on whether Rs and Ds ever get serious about cutting spending or if they just keep spending like teenagers given a credit and dropped off at the mall with no rules.

jamey said:

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txaggie_08 said:

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Sounds pretty high on bonds, unless you're close to retirement and pretty risk averse.

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I'm 55 yrs old and have 19% in bonds. Considering going to about 22 to 25% while yields are high.


That said I've always read seen mentions of the traditional 60/40 portfolio

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What kind of bonds? I'm 51 and we are 75/25, but almost all of that 25 is in a municipal bond ladder spinning off cash every quarter. When we want the cash, we take it - we typically use some of it to cover part of our property taxes since that it is our biggest annual expenditure now.

Otherwise, we ply it back into the ladder. When those bond rates lose their luster, we will shift that 25% to some other vehicle.

YouBet said:

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jamey said:

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txaggie_08 said:

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Sounds pretty high on bonds, unless you're close to retirement and pretty risk averse.

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I'm 55 yrs old and have 19% in bonds. Considering going to about 22 to 25% while yields are high.


That said I've always read seen mentions of the traditional 60/40 portfolio

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What kind of bonds?

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Its my 401K broad market bond index seeking to replicate the US bond index as measured by the Bloomberg US Aggregate Bond Index

I edited my response. Maybe something to consider.

YouBet said:

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I edited my response. Maybe something to consider.

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Looking at mine it's only 0.5% Municipal

Otherwise

47% Government
24% Corporate
27% Securitized

what are bonds


I have some MSTY

That's where I am. I'm happy with that. Class of '85, was retired 4 years ago, now semi retired, and retiring for last time in 18 months. My class of '27 graduates Dec 2026.

newbie11 said:

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That's where I am. I'm happy with that. Class of '85, was retired 4 years ago, now semi retired, and retiring for last time in 18 months. My class of '27 graduates Dec 2026.

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What's where you're at

dp

OldArmyCT said:

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I'm 78 and have never bought a bond fund in my life. I take RMD's every year, my account today is maybe 80% higher than it was when I retired (2018).

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You've also been retired through a pretty historic bull market. Sure, COVID, 2022, and this year has large drops, but recoveries were quick and the S&P is up over 100% since January 2018.

txaggie_08 said:

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OldArmyCT said:

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I'm 78 and have never bought a bond fund in my life. I take RMD's every year, my account today is maybe 80% higher than it was when I retired (2018).

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You've also been retired through a pretty historic bull market. Sure, COVID, 2022, and this year has large drops, but recoveries were quick and the S&P is up over 100% since January 2018.

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Yeah, I was thinking that too. Timing worked out well

How do bonds fit in going forward though, thats the question

jamey said:

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newbie11 said:

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That's where I am. I'm happy with that. Class of '85, was retired 4 years ago, now semi retired, and retiring for last time in 18 months. My class of '27 graduates Dec 2026.

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What's where you're at

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Not sure what you're asking. You want to know my net worth? Top 3% in the country.

We believe this theory is void going forward in an inflationary environment.

Look at what happened to bonds in 2022. The whole point of the 60/40 rule was to have an uncorrelated asset.

We find more benefits in the private markets when it comes to correlation. Things like private credit, pro sports, GP stakes, infrastructure funds, etc.

Now that doesn't mean zero bonds. Just enough to keep your liquidity where it needs to be. But we prefer to keep these very short term in length. The point being to make them your no risk part of your portfolio. Not something they lost 15% in 2022.

Good luck!

I have some bonds in a 2045 target date fund but I recently stopped contributing to that and now doing 100% equities with a 70/30 domestic and international split.

I'm probably at 8% overall and it's all in that TDF which is a taxable account so don't want to sell it.

I'm 36. My dad told me about the "100 or 110 - age rule" and I don't think it applies as much or it would have to be "120 - age".

I figure I'll switch to bonds at 55.

I'm less than 3% bonds at 39. I figure I'll evaluate as I reach 45 and bump bonds up a little bit, but still not much.

This guy recaps the deficit situation: pic.twitter.com/BbJqCB7H2c

— Lyn Alden (@LynAldenContact) June 27, 2025

jamey said:

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txaggie_08 said:

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OldArmyCT said:

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I'm 78 and have never bought a bond fund in my life. I take RMD's every year, my account today is maybe 80% higher than it was when I retired (2018).

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You've also been retired through a pretty historic bull market. Sure, COVID, 2022, and this year has large drops, but recoveries were quick and the S&P is up over 100% since January 2018.

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Yeah, I was thinking that too. Timing worked out well

How do bonds fit in going forward though, thats the question

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I should add that my income is a bit higher than most retired folks. 20 year Army officer + SS is not bad if one has few expenses, and Tricare for Life does away with the need for a secondary insurance. So I don't really need extra income and market stalls don't bother me much.

Talking about allocation is there a current rule of thumb percentage of investments to hold in private market funds that invest in private equity, real estate, private debt, etc?

Completely agree with Holistic Planning. I don't think 60/40 is a good idea…at least not in the world we're heading into.

The idea behind 60/40 was that bonds would offset stock market losses during downturns due to negative correlations and being a "safe haven." That worked well for the last 30-40 years because we were in a falling interest rate, low-inflation environment. Bonds had room to rally when things got rough, and they actually helped smooth out portfolios.

But that whole setup depended on one key thing: disinflation. And that's no longer the world we're in.

We're now dealing with much bigger structural issues like huge deficits, rising debt-to-GDP, inflation that's proving sticky, and central banks that are boxed in. In this kind of environment, bonds don't hedge equity risk the same way anymore. In fact, they can go down with stocks, like we saw in 2022 because they turn positive correlation during high inflation environment. That's a huge problem if you're relying on bonds to protect your downside.

On top of that, long-term bonds carry a lot more risk now and not just from inflation, but from the sheer amount of debt governments are piling up. Higher yields don't just hurt bond prices…they also make the fiscal math worse, which creates pressure on policymakers to intervene, distort markets, or let inflation run. That makes bonds a lot less "safe" than they used to be.

So no…..60/40 isn't totally dead, but it's built on assumptions that don't hold up anymore. If you're serious about managing risk going forward, you need to rethink what you're using as a hedge and whether bonds still deserve such a big role in your portfolio.

Ha, anyone looking for income?

https://www.wsj.com/finance/investing/these-funds-are-yield-magicians-how-do-they-do-it-ea63151a?st=6yfSy8&reflink=desktopwebshare_permalink

OldArmyCT said:

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Ha, anyone looking for income?

https://www.wsj.com/finance/investing/these-funds-are-yield-magicians-how-do-they-do-it-ea63151a?st=6yfSy8&reflink=desktopwebshare_permalink

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I saw that in yesterday's paper and noted some of the inaccuracies and lack of context.

Quote:

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Many of these ETFs are tied to such volatile stocks as Coinbase, MicroStrategy, Nvidia or Tesla. Often, much of the "yield" is just your own money handed back to you, and the principal value of your investment could shrivel.

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A YieldMax or Roundhill fund makes money by selling calls. It does so on a huge scale. It has to distribute 90% of earnings back to shareholders.

Quote:

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By selling options, most of these funds trade away some of a stock's future upside to earn higher income now. Often, they keep much of the downside. In most cases, when the stock goes up, these ETFs won't do nearly as well; when it goes down, the funds will do a little less badly.

Neena Mishra, director of ETF research at Zacks Investment Research, points out that the total returns of eight of these funds have trailed the underlying stock by at least 50 percentage points cumulatively since inception, with four of them behind by more than 100 percentage points.

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Yes, you're trading upside for payout on option income. The ETF shares don't gain value in price. But you can buy both the underlying and the ETF, then you can sell the underlying for a profit while still taking the ETF's payout.

Anyway, not too surprising there's a hit piece out there by that particular columnist. He always errs on the side of caution.

I would say throw some fun money at it and enjoy the income. I'm in ULTY which is about $6/share and pays about $.09/week or so. For every $6000 (1000 shares) you get $90-100/week. Also in MSTY and SMCY which pay monthly dividends, often well over $1/share sometimes closer to $2. Nice supplements. Know your own risk tolerance and go from there.

FDT 1999 said:

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Completely agree with Holistic Planning. I don't think 60/40 is a good idea…at least not in the world we're heading into.

The idea behind 60/40 was that bonds would offset stock market losses during downturns due to negative correlations and being a "safe haven." That worked well for the last 30-40 years because we were in a falling interest rate, low-inflation environment. Bonds had room to rally when things got rough, and they actually helped smooth out portfolios.

But that whole setup depended on one key thing: disinflation. And that's no longer the world we're in.

We're now dealing with much bigger structural issues like huge deficits, rising debt-to-GDP, inflation that's proving sticky, and central banks that are boxed in. In this kind of environment, bonds don't hedge equity risk the same way anymore. In fact, they can go down with stocks, like we saw in 2022 because they turn positive correlation during high inflation environment. That's a huge problem if you're relying on bonds to protect your downside.

On top of that, long-term bonds carry a lot more risk now and not just from inflation, but from the sheer amount of debt governments are piling up. Higher yields don't just hurt bond prices…they also make the fiscal math worse, which creates pressure on policymakers to intervene, distort markets, or let inflation run. That makes bonds a lot less "safe" than they used to be.

So no…..60/40 isn't totally dead, but it's built on assumptions that don't hold up anymore. If you're serious about managing risk going forward, you need to rethink what you're using as a hedge and whether bonds still deserve such a big role in your portfolio.

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That makes sense and kinda my thinking. I'm in bonds for 19% currently but thinking 60/40 is way too high


Bessent has spoken about the genius act and how it could create demand for US treasuries thru stablecoins

From what I recall from my advanced portfolio class, we did an analysis of the stock market and determined that anything above about 30% bonds was actually counter productive from a risk/return perspective

Done7 said:

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60%stock/20%Bitcoin/20%Bonds

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Thats tempting, especially with the big bloated bill. I'm in bitcoin and a small amount of ethereum but for more like 2.7%

NFA but Ditch the ETH