Excellent- the fact is that NO strategy will be in favor every single year. A lot of people probably scrambling to adjust their portfolio this year, may be surprised that as soon as they complete it the news will change and they will be poorly positioned. Choose a strategy and stay the course.
I sold all my bond funds a few months ago. Bond funds and individual bonds are different animals. Started buying individual short term investment grade corporate bonds paying 6 percent. Also bought various CDs paying 4 to 5 percent for 2 and 3 years. Until the Fed is done raising rates, I'm staying away from bond funds.
I think that bond funds should ALWAYS be avoided. Yes..purchasing individual bonds is a bit more of a hassle, but there is plenty of info out there, on how to do it. I made the switch away from bond funds, about two years ago, and I'm INCREDIBLY gladl that I did!
60% Stocks/ 40 % Bonds Historical Risk/Return (1926-2020) Average annual return 9.1% Best year (1933) 36.7% Worst year (1931)-26.6% Years with a loss of 22 of 95=20.9% Take care and God bless
Thats great for someone young, but as I grew older (I'm 65 ) I have a 50/50 portfolio and feel much more comfortable. It totally depends on risk tolerance. 👌
I agree with your overall point Rob and thanks for the positive spin on what this means moving forward. We do need to acknowledge though that this year has been the worst year for 60/40 since 1937. It's worse than 1974. So the worst year in the last 85 years. That is a very long damn time. So the worst year in our lifetimes. That basically means that for the 401k, this is the worst year ever for 401ks since they haven't really been around that long. But I agree that the 60/40 is not dead
Thanks. I’m holding onto mine, but my bond 40% is much more diversified between short term, TIPS, junk , and preferred stocks (ISTB, SCHP, EIBIX, PFFV) I am currently retired
I have been retired for 5 years and have settled on a portfolio that is maintained at 45% US stock funds, 15% ex-US stock funds, the remainder being bond funds and short-term reserves. The equity sleeve is predominantly Total Stock Market Index and Total International Stock Index. As a slight modification to market weighting, I target between 5% to 6% each of International Dividend Appreciation Index, Real Estate Index, and Small Cap Value Index. I rebalance as often as it seems favorable and use a similarly composed proxy ETF portfolio as a daily price change guide. My thinking is that rebalancing more often than generally recommended takes advantage of short-term market fluctuations which has a significant long-term accumulative effect.
Smart video Rob, I like how you cover a topic from as many angles as possible it answers our questions , helps us learn, thanks. Keep up the good work!
I am currently retire with wife still working and I have 80/20 and is planing to go to 70/30. Rob, I know you have something similar to what I have. Can you please share the reasons why you are not doing 60/40 even in your video you said the 60/40 portfolio is sill alive and well?
Rob, Why would anyone be in bonds at this point? We have 90-day T-bills and Money Market Funds yielding close to 5% with no risk? Bonds continue to track the stock market instead of moving inverse to stocks. Bonds will continue to drop as interest rates go up just like equities. It just does not make sense to me to have anything invested in bonds for 2023 until the Fed signals that it will stop raising rates. I'm changing my portfolio to SCHD, VIOV and doing 50% in Money Markets and T-bills and a smaller percentage in emerging market stocks. I don't see the first three quarters of 2023 being any better than 2022. Tell me why I'm wrong.
Can't believe the number of people who are missing the big picture on having a stock/bond allocation model. They are panicking because stocks and bonds have fallen together when generally they have an inverse relationship. The value of bond funds have taken a big hit because of rising interest rates, but will begin rising because of earning higher dividends. Study after study shows that a 60/40 or 70/30 allocation does very well with much less risk than a 100% stock allocation or trying to time the market and buying cash. Those who are bashing bond funds will eat their words as bond funds begin to do well and fulfill their purpose of balancing the risk of stocks. A 100% stock allocation only makes sense for those with a long time horizon before needing that money - not for those near or in retirement.
@@FatherGapon-gw6yo Yes, you are correct. When interest rates begin to fall, bond funds will increase in value. While interest rates are high, they are paying higher dividends. I've never been a big fan of bond funds, but I have become convinced that they are important as we near or are in retirement.
Rob - a little off topic but would you consider a discussion of adding exposure to European stocks given how depressed their valuations are vs. US Stocks? They also have strong dividends. Great article in the WSJ today by Eric Wallerstein that discuses how Euro stocks will perform better over the next decade than US stocks. Obviously Vanguard has several ETF's like say VEUSX. Any thoughts appreciated. Love your channel and just got your Blue Book!
don't forget to add 7% annual inflation rate to -16% 60/40 portfolio.....so -23% real....from early 80's to 2008 and 2020 we had rates go from approximately 20% to 0% +QE which means negative rates.....that's what made the 60/40 portfolio work so well....I wouldn't expect that in the future.
Many see rates going down maybe mid-late 2024. BlackStone CEO talked about 2020s being a ‘lost decade’ w/extended flat growth in US and other countries.
I feel an investor needs to have a long term risk bucket in their portfolio also, that is if they don't want to live on a fixed income of 40 grand, which is poverty level IMO. ETF indexes are good for one particular bucket but shouldn't occupy the entire equity bucket. You need good equities such as tesla and other high long term growth money makers (we are living in the age of disruptive technology). If a person (investor) is taking the time to do their own investing (great for him) then they need to take the time researching good long term growth funds. There is a lot of great youtube info on them so there is no excuse for not being knowledgeable. I like your channel, it gives me a different perspective on investing.
If you guys in the USA think the dollar is going to keep weakening then it might be a good idea to look at getting some international and emerging market exposure in the local currency.
The dollar is becoming stronger than other currencies, you can make the case that all currencies in the world are becoming weaker(including the USD), but that wouldn't make a good case for seeking exposure to other currencies
Rob why do you have to be so cold and calculating? I mean sticking to the facts and all! Much more fun to be hyper dramatic. It’s the end of the modern portfolio and all! Sadly fear sells in the news and financial media and even the WSJ gets into it at times. Keep up the great videos.
I'm 59 with less than $52k saved in 4 01k so not thinking of retiring till 70. Got 80%/20% in Large Caps/Smalls Caps Funds. Plus IBonds starting this year..... That's risk taking
Hi Don, You will get there, be consistent in your investing. Workout your budget to maximise your investment contributions and don't let people cause you to self doubt. Be patient and keep learning.
I see your point but don’t fully autopilot any investment. If there are large gains/losses in a short time period, key life changes etc then things need to be reviewed. Also rebal 1-2x per yr.
@@jmc8076 my understanding is that the best results arrive when you leave things alone. autopilot will continue to buy when things do down. human pilot will sell. one of those makes money over time. one of those loses money.
I am 73yo and at present 11% gold 2% foreign stocks 87% treasuries and mm ---- Just sitting here waiting to buy --- Then I will be 11% gold 50% stocks (defensive) 50% (corp bonds, treasuries, munies, mm, what ever is paying) ---I don't live off my investments but when I'm gone the wife will use some
Rob, I've watched a lot of your videos, and thank you for your advice. I want to know if you have any words of encouragement for those of us who can only invest $200-$500 a month because we live paycheck to paycheck and don't have a lot of money, and feel bad about the fact that we can't contribute as much to our portfolios as others can. I'm in my 30's so I have a while before retirement, but I just don't feel confident that my small monthly investments will amount to much. Is there hope for us small investors? I'm maxing out my Roth IRA, and putting the rest into either an HSA fund or a SEP-IRA using a 6-fund portfolio.
@rob_berger - Hello Rob - Would you know of any online tool that reports all company stocks under all of my ETFs combined? For example, I have Apple across a few ETFs but don't know how much of my overall portfolio is Apple. Besides calculating on Excel, is there an online tool that can report the overall percentage of companies in my ETF portfolio? Thank you.
Excellent- the fact is that NO strategy will be in favor every single year. A lot of people probably scrambling to adjust their portfolio this year, may be surprised that as soon as they complete it the news will change and they will be poorly positioned. Choose a strategy and stay the course.
Exactly.
Buy assets that are low it's not hard to react to the market. Buy VTI when it's low or buy bonds when they're low.
Don’t time the market
I sold all my bond funds a few months ago. Bond funds and individual bonds are different animals. Started buying individual short term investment grade corporate bonds paying 6 percent. Also bought various CDs paying 4 to 5 percent for 2 and 3 years. Until the Fed is done raising rates, I'm staying away from bond funds.
I think that bond funds should ALWAYS be avoided. Yes..purchasing individual bonds is a bit more of a hassle, but there is plenty of info out there, on how to do it. I made the switch away from bond funds, about two years ago, and I'm INCREDIBLY gladl that I did!
Agree......individual bond (short term) also allow you to change things if you want, and as you say you get a higher percentage return!
60% Stocks/ 40 % Bonds
Historical Risk/Return (1926-2020)
Average annual return 9.1%
Best year (1933) 36.7%
Worst year (1931)-26.6%
Years with a loss of 22 of 95=20.9%
Take care and God bless
I’m about 60/40 and not in bonds, bonds suck. 60 in etf and mutual index funds S&P and other in 5 percent money markets
i am 26 and i never invested in 60/40 until this year. I am happy to get something in return from the risk i am taking with my bonds.
Dramatic title on the WSJ title but it is true that bond performance typically provides a buffer to negative returns in stocks. Not this time...
More accurately not this year. I hope nobody was holding a 60/40 portfolio for a one-year time period
Best finance channel on TH-cam. Glad I stumbled on you!
Perfect time to start 60/40 portfolio.
Bring back the messy shelf, Rob!
I am 43 and still dont do bonds i am 80% in growth ETF and 20% in dividend ETF and have been for over 10 year now doing just fine now.
Thats great for someone young, but as I grew older (I'm 65 ) I have a 50/50 portfolio and feel much more comfortable. It totally depends on risk tolerance. 👌
I'm down
Thanks, Rob. This is why you are my “go to” resource on my retirement investing. So logical and reasonable.
Would love to see a video how one might assign their asset allocation by age.
I agree with your overall point Rob and thanks for the positive spin on what this means moving forward. We do need to acknowledge though that this year has been the worst year for 60/40 since 1937. It's worse than 1974. So the worst year in the last 85 years. That is a very long damn time. So the worst year in our lifetimes. That basically means that for the 401k, this is the worst year ever for 401ks since they haven't really been around that long. But I agree that the 60/40 is not dead
Equity market crash happens more often than bonds. Bonds will always have a place.
Thanks, Rob another great video it's crazy how smart people pay some one to invest their money.
Thanks. I’m holding onto mine, but my bond 40% is much more diversified between short term, TIPS, junk , and preferred stocks (ISTB, SCHP, EIBIX, PFFV) I am currently retired
You're really killing it with that outro, nice!
Could you just invest in vanguard wellington ?
Bnd is down 14% ytd and voo is down 17% I'll pass on bonds
@@tennnis498 I have a bridge to sell you if you think inflation is cooling.
Excellent content as always
Hello Joe!
Thanks for watching Joe!
Thanks for the video, I agree.
I have been retired for 5 years and have settled on a portfolio that is maintained at 45% US stock funds, 15% ex-US stock funds, the remainder being bond funds and short-term reserves. The equity sleeve is predominantly Total Stock Market Index and Total International Stock Index. As a slight modification to market weighting, I target between 5% to 6% each of International Dividend Appreciation Index, Real Estate Index, and Small Cap Value Index. I rebalance as often as it seems favorable and use a similarly composed proxy ETF portfolio as a daily price change guide. My thinking is that rebalancing more often than generally recommended takes advantage of short-term market fluctuations which has a significant long-term accumulative effect.
Thanks for making that clear ;)
Excellent!
Excellent well thought out video. Thanks Rob but how dare you remove Rom! Where is the space knight?
Smart video Rob, I like how you cover a topic from as many angles as possible it answers our questions , helps us learn, thanks. Keep up the good work!
2/3 NTSX plus 1/3 DBMF … 60/40 plus Managed Futures
What about corporate bonds instead of only treasuries?
I am currently retire with wife still working and I have 80/20 and is planing to go to 70/30. Rob, I know you have something similar to what I have. Can you please share the reasons why you are not doing 60/40 even in your video you said the 60/40 portfolio is sill alive and well?
Good information Rob... Thanks!
Rob, Why would anyone be in bonds at this point? We have 90-day T-bills and Money Market Funds yielding close to 5% with no risk? Bonds continue to track the stock market instead of moving inverse to stocks. Bonds will continue to drop as interest rates go up just like equities. It just does not make sense to me to have anything invested in bonds for 2023 until the Fed signals that it will stop raising rates. I'm changing my portfolio to SCHD, VIOV and doing 50% in Money Markets and T-bills and a smaller percentage in emerging market stocks. I don't see the first three quarters of 2023 being any better than 2022. Tell me why I'm wrong.
because the market is always right and valuations for the biggest market in the world might be more correct then your assesment
Can't believe the number of people who are missing the big picture on having a stock/bond allocation model. They are panicking because stocks and bonds have fallen together when generally they have an inverse relationship. The value of bond funds have taken a big hit because of rising interest rates, but will begin rising because of earning higher dividends. Study after study shows that a 60/40 or 70/30 allocation does very well with much less risk than a 100% stock allocation or trying to time the market and buying cash. Those who are bashing bond funds will eat their words as bond funds begin to do well and fulfill their purpose of balancing the risk of stocks. A 100% stock allocation only makes sense for those with a long time horizon before needing that money - not for those near or in retirement.
If I am beginning to understand correctly, the return of a bond fund should be the coupon as dividends-not its price which moves with the rate?
@@FatherGapon-gw6yo Yes, you are correct. When interest rates begin to fall, bond funds will increase in value. While interest rates are high, they are paying higher dividends. I've never been a big fan of bond funds, but I have become convinced that they are important as we near or are in retirement.
Rob - a little off topic but would you consider a discussion of adding exposure to European stocks given how depressed their valuations are vs. US Stocks? They also have strong dividends. Great article in the WSJ today by Eric Wallerstein that discuses how Euro stocks will perform better over the next decade than US stocks. Obviously Vanguard has several ETF's like say VEUSX. Any thoughts appreciated. Love your channel and just got your Blue Book!
I'd rather buy European index funds than bonds any year tbh
This might actually be a great time to buy bonds. The 60/40 is still alive, unless you can take more risk.
don't forget to add 7% annual inflation rate to -16% 60/40 portfolio.....so -23% real....from early 80's to 2008 and 2020 we had rates go from approximately 20% to 0% +QE which means negative rates.....that's what made the 60/40 portfolio work so well....I wouldn't expect that in the future.
Many see rates going down maybe mid-late 2024. BlackStone CEO talked about 2020s being a ‘lost decade’ w/extended flat growth in US and other countries.
So a Balanced fund like Vanguard VBIAX or Fidelity FBALX is a good option for someone who is 10 years out?
I feel an investor needs to have a long term risk bucket in their portfolio also, that is if they don't want to live on a fixed income of 40 grand, which is poverty level IMO.
ETF indexes are good for one particular bucket but shouldn't occupy the entire equity bucket. You need good equities such as tesla and other high long term growth money makers (we are living in the age of disruptive technology). If a person (investor) is taking the time to do their own investing (great for him) then they need to take the time researching good long term growth funds. There is a lot of great youtube info on them so there is no excuse for not being knowledgeable.
I like your channel, it gives me a different perspective on investing.
If you guys in the USA think the dollar is going to keep weakening then it might be a good idea to look at getting some international and emerging market exposure in the local currency.
The dollar is becoming stronger than other currencies, you can make the case that all currencies in the world are becoming weaker(including the USD), but that wouldn't make a good case for seeking exposure to other currencies
@@luisoncpp
Prob won’t stay that way. Fed running of liquidity/bal.
Yes many good sources have said next 5-10 yrs good for EMs esp India, Brazil and S. Africa.
ty
What type of Bond ETF would be good for a ROTH IRA?
If you absolutely have to have bonds in a Roth....BND is good
Rob why do you have to be so cold and calculating? I mean sticking to the facts and all! Much more fun to be hyper dramatic. It’s the end of the modern portfolio and all! Sadly fear sells in the news and financial media and even the WSJ gets into it at times. Keep up the great videos.
I'm 59 with less than $52k saved in 4 01k so not thinking of retiring till 70. Got 80%/20% in Large Caps/Smalls Caps Funds. Plus IBonds starting this year..... That's risk taking
80/20 large/small performs about the same as a total market index like vti.
Yeah my plan doesn't have a total mkt index 😶
Hi Don, You will get there, be consistent in your investing.
Workout your budget to maximise your investment contributions and don't let people cause you to self doubt. Be patient and keep learning.
@@donburbank593 tsp?
@Rob_berger but are bond funds dead?
Or, just put it on autopilot with the Wellington Fund (65/35) and be done with it.
I see your point but don’t fully autopilot any investment. If there are large gains/losses in a short time period, key life changes etc then things need to be reviewed. Also rebal 1-2x per yr.
@@jmc8076 my understanding is that the best results arrive when you leave things alone. autopilot will continue to buy when things do down. human pilot will sell. one of those makes money over time. one of those loses money.
I prefer the 40/60 portfolio with dividend income
I am 73yo and at present 11% gold 2% foreign stocks 87% treasuries and mm ---- Just sitting here waiting to buy --- Then I will be 11% gold 50% stocks (defensive) 50% (corp bonds, treasuries, munies, mm, what ever is paying) ---I don't live off my investments but when I'm gone the wife will use some
Rob, I've watched a lot of your videos, and thank you for your advice. I want to know if you have any words of encouragement for those of us who can only invest $200-$500 a month because we live paycheck to paycheck and don't have a lot of money, and feel bad about the fact that we can't contribute as much to our portfolios as others can. I'm in my 30's so I have a while before retirement, but I just don't feel confident that my small monthly investments will amount to much. Is there hope for us small investors? I'm maxing out my Roth IRA, and putting the rest into either an HSA fund or a SEP-IRA using a 6-fund portfolio.
$350, 12 times a year, for 20 years will be 300K to 400K
$350, 12 times a year, for 30 years will be 1 Million plus
@@Random-yq1wu Wow, I feel so much better haha. That's good to know that my small investment over time can make a difference. Thank you so much.
$200 to $500 a month is HUGE would invested over time. My advice? Keep up the good work!
@@rob_berger Thank you Rob!
@Craig I think that's a great way to think about it, thank you.
Rob, I am thinking about adding some diversity to my portfolio....what do you think about FTX? :)
What changes have you made to your personal portfolio in the last year?
@rob_berger - Hello Rob - Would you know of any online tool that reports all company stocks under all of my ETFs combined? For example, I have Apple across a few ETFs but don't know how much of my overall portfolio is Apple. Besides calculating on Excel, is there an online tool that can report the overall percentage of companies in my ETF portfolio? Thank you.