Note that this section of the website is not particularly active; I hope to publish about one personal finance article per month.

Sunday, December 21, 2014

Why 60/40?

One of the stronger "rules of thumb" for investing was to have a "60/40 Portfolio": holding 60% equities (stocks), and 40% bonds. This portfolio allocation is aimed at providing good long-term performance with acceptable risk. In this article, I explain why the 60/40 allocation is reasonable - the tilt towards equities should provide higher returns, but the allocation allows for considerable uncertainty in future investment returns.