It’s evident that most investment advisers are not really certain how much stocks and bonds go into what can be considered a “balanced” investment portfolio.
What had been a simple assumption prior to the 2008 financial meltdown is now subject to lots of conjecture. That’s due to the fact both stocks and bonds fell in unison at that time. And they may react differently during recoveries.
The past 60% stocks and 40% bonds balance formula may not be that standard. And changes in formulae adjustments as investors age, may no longer hold.
Some mutual funds are offering “absolute returns” where losses could result under past stock/bond arrangements.
The solution calls for more flexibility because there is no set formula an investor can use for holding stocks or bonds. Too many factors will affect choices.
Upcoming inflation, retirement age and the health of both investor and beneficiary relationships, all come into play. And the possibility that bonds may return more than stocks in coming years, are considerations.
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