Get The FREE Spreadsheet! https://averagejoeinvestor.kit.com/60-40
In this video we are talking about the 60/40 Retirement Portfolio. Specifically, we are talking about adjusting this retirement portfolio to replace the bonds / bond ETF's with holding cash and selling options. Selling SPY Weekly Options on the S&P 500.
----------------------------------------------------------------------------------------
JOIN THE PATREON COMMUNITY!
➡ / averagejoeinvestor
WANT ACCESS TO ALL OF MY SPREADSHEETS I USE ON THE CHANNEL ALONG WITH THE MONTHLY DIVIDEND STOCK SPREADSHEET AND INSTANT AWARENESS OF CHANGES TO MY PORTFOLIO? JOIN THE PATREON COMMUNITY!
-----------------------------------------------------------------------------------------
➡ / averagejoeinvestor
You can also Work with Joe 1 ON 1!
Want to increase your option selling knowledge and get started!
-----------------------------------------------------------------------------------------
🔴 Partner With Me - [email protected]
-----------------------------------------------------------------------------------------
This communication/content is for informational purposes only and is not intended as personalized investment advice, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon for purposes of transacting in securities or other investment vehicles.
------------------------------------------------------------------------------------------
The 60/40 retirement portfolio—comprising 60% stocks (equities) and 40% bonds (fixed income)—is a classic investment strategy for balancing growth and stability, especially as you approach or enter retirement. Below is a comprehensive overview covering what you need to know:
What is a 60/40 Retirement Portfolio?
A 60/40 portfolio aims to harness the long-term growth of stocks (the 60%) with the lower risk and income generation of bonds (the 40%). It is rooted in modern portfolio theory, which recommends diversifying across asset classes with different risk and return profiles to reduce the overall portfolio risk while aiming for a reasonable return. Historically, this mix has provided an average annual return of around 9%, or about 5.9% after inflation.
Why was 60/40 Popular for Retirees?
Simplicity: Easy to implement and manage, especially through ETFs or mutual funds.
Balanced Growth with Risk Mitigation: Bonds can buffer against an equity downturn, potentially minimizing large portfolio losses in bear markets.
Steady, Predictable Returns: Historically, this allocation has provided robust returns with lower year-to-year volatility than an all-stock portfolio.
“Set and Forget”: Suitable for hands-off investors, requiring only occasional rebalancing.
Fits Moderate Risk Tolerance: It is often recommended for those close to or in retirement who need both growth and income.
How to Manage a 60/40 Portfolio
Rebalancing: Annually or when allocations stray too far due to market movements.
Diversification within the 60/40 framework: Adding international stocks, bonds, or even different sectors (like healthcare and tech) for further resilience.
Withdrawal Planning: Structure withdrawal rates to last through retirement, accounting for the sequence-of-returns risk (the danger of poor market performance in early retirement shortening your savings’ lifespan).
Risks and Limitations
Stocks and Bonds Can Both Fall: As seen in 2022, both asset classes can decline together, undermining the diversification premise.
Longevity Risk: Due to rising life expectancies, this standard allocation may not provide growth sufficient to sustain a retirement that lasts 30–40 years.
Limited Diversification: Traditional 60/40 ignores alternative asset classes, potentially increasing vulnerability in changing market environments.
Lower Long-Term Growth: Compared to higher equity portfolios, the 60/40 strategy may not keep up with inflation over long retirement periods.
Market Conditions: Poor early performance can jeopardize retirement security due to sequence-of-returns risk.
Recent Debate: Is the 60/40 Portfolio “Dead”?
Many experts believe the environment that made the 60/40 work so well (falling interest rates, negative stock/bond correlation) has changed. Today’s market features higher dispersion, inflation, and unpredictable correlations, leading some to suggest “upgrading” the portfolio with alternatives or higher stock allocations.
Some advisors now recommend 70–80% stocks for healthy investors retiring early to mitigate longevity and inflation risk.
When yields are high, a 60/40 mix can rival all-stock portfolios in returns, but with less volatility; but, with very low yields, more equity may be appropriate.
Информация по комментариям в разработке