Stocks/Bonds 20/80 Portfolio: ETF allocation and returns (2024)

FAQs

Are 80% stocks and 20% bonds good? ›

If you take an ultra-aggressive approach, you could allocate 100% of your portfolio to stocks. A moderately aggressive strategy would contain 80% stocks to 20% cash and bonds. For moderate growth, keep 60% in stocks and 40% in cash and bonds.

This investment strategy seeks total return through exposure to a diversified portfolio of primarily Fixed Income, and to a lesser extent, equity asset classes with a target allocation of 20% equities and 80% Fixed Income. Target allocations can vary +/-5%.

This investment strategy seeks total return through exposure to a diversified portfolio of primarily equity, and to a lesser extent, Fixed Income asset classes with a target allocation of 80% equities and 20% Fixed Income. Target allocations can vary +/-5%.

While there's no standard rule of thumb, a mix of 80% stocks and 20% bonds is aggressive, but not overly so. With time on their side, a younger investor can feel confident that the rewards of stocks outweigh their risks. But for someone close to retirement, that same 80/20 mix may be too risky.

At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).

Many financial advisors recommend a 60/40 asset allocation between stocks and fixed income to take advantage of growth while keeping up your defenses.

As of August 2024, in the previous 30 Years, the Stocks/Bonds 80/20 Portfolio obtained a 9.59% compound annual return, with a 12.51% standard deviation. It suffered a maximum drawdown of -41.09% that required 39 months to be recovered.

It's relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation.

Specifically, a fund is prohibited from: acquiring more than 3% of a registered investment company's shares (the “3% Limit”); investing more than 5% of its assets in a single registered investment company (the “5% Limit”); or. investing more than 10% of its assets in registered investment companies (the “10% Limit”).

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

What is a good asset allocation for a 55 year old? ›

The point is that you should remain diversified in both stocks and bonds in an age-appropriate manner. A conservative portfolio, for example, might consist of 70% to 75% bonds, 15% to 20% stocks, and 5% to 15% in cash or cash equivalents, such as money-market funds.

Build a portfolio with 80 percent stocks and 20 percent bonds. If you think you could tolerate a portfolio with 80 percent stocks and 20 percent bonds, build a portfolio with 70 percent stocks and 30 percent bonds.

A standard example of an aggressive strategy compared to a conservative strategy would be the 80/20 portfolio compared to a 60/40 portfolio. An 80/20 portfolio allocates 80% of the wealth to equities and 20% to bonds, compared to a 60/40 portfolio, which allocates 60% and 40%, respectively.

The rule of thumb advisors have traditionally urged investors to use, in terms of the percentage of stocks an investor should have in their portfolio; this equation suggests, for example, that a 30-year-old would hold 70% in stocks and 30% in bonds, while a 60-year-old would have 40% in stocks and 60% in bonds.

Long-Term Investors: The 90/10 strategy is ideal for individuals with a long investment horizon, such as those in their 20s, 30s, or 40s who are saving for retirement. These investors have time on their side, allowing them to ride out market volatility and benefit from the long-term growth potential of equities.

The 60% equity allocation provides the lion's share of the returns as a simple yet effective exposure to broad economic growth. And no one wants too much risk, so the 40% bond allocation is a simple way to diversify the portfolio and avoid excessive risk. It's a beautifully simple story with historical credibility.

It may be the most appropriate for younger people or those who have substantial income from other sources. A model that allocates 60% to stocks, 30% to bonds, and 10% to cash is generally described as moderate, and one that allocates 40% to stocks, 40% to bonds, and 20% to cash can be described as conservative.