A friend sent me the following article from the USA Today insert of his local paper. The article proclaimed “ The 60/40 stock-and-bond portfolio mix is dead in 2016” and went on to explain that with bond interest rates near historical lows, one should reach for higher returns by taking more risk with stocks. The article quoted one adviser who suggested investors in their 60s invest 70 to 80 percent of their portfolio in stocks.
Last week, 200 “Bogleheads” met for an annual gathering near Philadelphia, PA to hear the legendary founder of Vanguard, the world’s largest fund company, talk about investing. The Bogleheads is a not-for-profit organization in which anyone can post financial questions (at bogleheads.org) and then hundreds of volunteer members (Bogleheads) who are seasoned investors respond with advice — generally without a profit motive.
Most of us have heard that stocks have outperformed bonds in the long run. But what is the definition of long run? So far this century, have stocks really outperformed?
In a recent column I exposed my own portfolio and its daring dullness. It is that very dullness which, I believe, is the key to its success. Still, beneath this dull exterior beats the heart of “The Gambler.” Even yours truly gets the occasional urge to buy that risky stock, offering the possibility of a 1,000 percent return, and sometimes I just can’t resist acting on that thrill-seeking urge.
People are often surprised when I describe my personal portfolio to them. Using an analyzing tool from Chicago-based Morningstar, I’ve put together a brief description of my own daringly dull portfolio and, far more important, why it looks like it does.
I’m a fan of the so-called “ robo-advisers.” These are online wealth management services that provide automated software-based portfolio management advice without the use of human advisers. Two of the larger robo-advisers are Betterment and Wealthfront. In addition, Schwab recently launched its version, branded Intelligent Portfolios, and Vanguard has a product called Personal Advisor Services.
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