Is the 60/40 Portfolio Dead? What Investors Should Know in 2025 and Beyond

09/25/2025

Is the 60/40 portfolio dead? For decades this portfolio model (60% equities and 40% bonds) was considered the gold standard for long-term investors. It gave growth through equities, stability through bonds, and diversification that helped smooth out the ride. Pension funds, advisors, and individual investors relied on it as a “set it and forget it” strategy.

In 2025 the financial world looks different. Inflation, volatility, and shifting correlations have many asking the same question: Is the 60/40 portfolio still enough? That question is at the heart of my book, How to Build Portfolios That Actually Work, which lays out a modern framework for building strategies that can thrive in today’s environment.

Why 60/40 Worked in the Past

For most of the last half-century, 60/40 made sense.

• Bond yields were high. Investors could count on reliable income from the 40.

• Stocks and bonds moved differently. When stocks dropped, bonds often rose.

• Simplicity worked. It was easy to explain, easy to implement, and effective.

That mix allowed generations of investors to grow wealth steadily without overcomplicating their portfolios.

Why 60/40 Is Under Pressure Today

The environment of the 2020s challenges nearly every assumption that made 60/40 effective.

• Low bond yields. Fixed income produces less income and struggles to keep up with inflation.

  
  

• Higher inflation and volatility. Both stocks and bonds are vulnerable at the same time.

  
  

• Correlation breakdown. In 2022 and 2023 equities and fixed income fell together, exposing weaknesses.

  
  

• Geopolitical and fiscal risks. Rising debt, global competition, and demographic pressures add new uncertainty.

The result is a portfolio that once provided growth and balance may now expose investors to more risk and lower expected returns.

What This Means for Investors

The 60/40 model is not completely broken, but it is no longer the reliable safety net it once was. Investors depending only on it may face:

• Lower long-term growth than past generations.

• Bigger drawdowns during periods of stress.

• Less diversification when it matters most.

For those preparing for retirement or seeking to preserve wealth, that reality can be dangerous.

Beyond 60/40: Smarter Portfolio Construction

Today’s environment calls for precision and adaptability. A modern portfolio may include:

• Alternative income sources such as private credit, infrastructure, or real estate.

• Targeted equity themes such as AI, clean energy, healthcare, or utilities.

• Risk management tools such as tactical tilts, stress testing, and scenario analysis.

Instead of assuming yesterday’s allocation will work tomorrow, investors need strategies designed for today’s markets, today’s risks, and today’s opportunities.

A Real-World Example

Consider an investor who retired in early 2022 with a traditional 60/40 portfolio. Historically, they might have expected bonds to protect them if stocks fell. Instead, both stocks and bonds declined sharply in the same year.

For this retiree, the result was a double hit. Their equity holdings lost value at the same time their bond income failed to keep up with inflation. On paper, the “balanced” portfolio looked more like a concentrated bet than a diversified plan.

That experience underscored the risk of relying too heavily on past models in today’s environment. Investors approaching retirement can’t afford to assume 60/40 will work the way it did for previous generations.

Final Takeaway

The 60/40 portfolio served its purpose for decades, but markets evolve and investment strategies need to evolve with them. Investors who adapt will be positioned to thrive, while those clinging to outdated models may fall behind.

That's why I wrote How to Build Portfolios That Actually Work – to help investors move beyond outdated frameworks and build strategies aligned with real goals in today’s market.

Explore these ideas further in the book (now available on Amazon and Barnes & Noble), or contact us for a portfolio review tailored to your goals.

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Note: This information is for educational purposes and should not be considered financial advice. BFG Wealth Management and/or its clients may hold positions in companies mentioned at the time of this article. Consult with a financial advisor for personalized guidance.

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