The 4% Rule & The 60/40 Portfolio

And what we see over time is that bond protect you from one of the biggest risk in retirement, which is being forced to sell your investments when they're down. That's what can actually wreck a plan and bonds along with high yield savings or cash equivalent are some of the simplest tools we have to protect ourselves. So here's the question, are bonds or 60/40 portfolio, are they dead? Right, should we hold bonds in 2026 despite all the eulogies that have been written?

The honest answer is that the 60/40 in my opinion is probably not dead. I'm hedging this here because this is not investment advice. But Vanguard's chief economist for the Americas has shown that a 60/40 portfolio returned 8.8% annualized from 1926 through 2021. That's nearly a century of data through depressions and World Wars and stagflation and dot com crashes and global financial crises and terrorist attacks. Now here's the question, what's the future going to look like? We have no idea. 2022 showed us that when inflation is running hot and the Fed is aggressively raising rates, stocks and bonds can fall at the same time.