Recently we’ve seen quite a few headlines that suggest that the concept of the 60/40 portfolio has run its course. However, a fair amount of pushback is caused by people adopting this concept for the wrong reasons. In this episode, Grant dives into the unique benefits of the 60/40 portfolio that made it so popular, why this concept is still valid, and how to properly use this portfolio concept in today’s economic conditions.
[01:40] The 60/40 Rule – Grant explains the idea behind the 60/40 rule, how it became extremely popular among investors over the last few decades, and why some people have started to question its relevance.
[04:00] Economic Trends – Grant dives into some of the economic trends related to inflation and deflation that caused a lot of speculation recently and their impact on businesses and investments.
[10:59] Diversification Benefits – Grant discusses the benefits of having both stocks and bonds in a portfolio and how it improves the risk-adjusted return over a long period.
[14:50] Tough Economic Conditions – Grant explains how the mortgage crisis affected people’s confidence around the diversification benefits of having stocks and bonds and how a combination of stocks and bonds can help your portfolio survive a period of tough economic conditions.
[23:20] The Bonds are Your War Chest – Grant dives into how to take advantage of bonds to improve your portfolio while stocks are underperforming.
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