Ask Terry Questions 60/40 petcent

60/40 petcent

By Terry Savage on October 13, 2023 | Investments

Hi Terry,
I know the old 60/40 retirement thesis has gone away. But I’m15 years prior to retiring, what should the % be?

I’m currently 75% S&P fund 25 % bond fund. My latest quarterly statement was negative.
401(k)s are like a bar of soap. The more you handle them, the smaller they get.

Any thoughts? Am I diversified 75/25?


Terry Says

You made me laugh with your bar of soap analogy! There are no more rules. For the past two years it was easy to lose money in BOTH stocks AND bonds. That’s because when interest rates rise, bond prices fall. And this hasn’t been a good year for stocks, although last year showed double-digit gains in the S&P 500.

Since you’re 15 years away from retirement, you should let the money continue to grow in the S&P 500 fund, since there has never been a 20-year period where you would have lost money in that kind of investment. BUT, if you’re getting a bit nervous — and knowing you might have to ride out some down years before retirement — you could consider taking some money from stocks and some from bonds and putting it into the safest alternative in your plan — a money market fund, or a very short-term govt bond fund. That would let you sleep at night and make sure you won’t panic if the stock market takes a slide!



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