Has The Classic Diversified Portfolio Outlived it's Usefulness?
This week CNBC posted an article and interview with Burth Malkiel, Wealthfront chief investment officer, Princeton professor and author of "A Random Walk Down Wall Street." to discuss Why traditonal diversification is 'downright dangerous'.
For almost 70 years the traditional 60/40 rule has been used by investors. The long- held rule of having 60% of your money in stock and 40% in bonds and for the most part it has worked in the past. After the last decade of unprecedented market conditions, is it a good time to change an old way of thinking?
Obviously, we live in a more wildly diverse investing world than a half century ago. The Federal Reserves borrowing (which hold interest rates down), a longer life expectancy, and the impact of inflation over a longer retirement all must be accounted for when planning for retirement. As well as modifying risk as an individual grows older and their goals and stages of life change.
The correct allocation should depend on your unique circumstances to create that safe and secure income in retirement.
This article is another example that it is dangerous to follow the old rules when it comes to diversifying your portfolio. If you feel it's time to sit down with a Retirement Planning Specialist, call our office at (775) 853-9033.