Vanguard's New 40-60 Portfolio: Less Volatility, More Sleep
Update: 2025-12-24
Description
Vanguards New Investment Strategy: A Shift Towards Balanced Risk and RewardVanguard is revolutionizing investment strategies for 2026, moving away from the traditional 60/40 stocks-to-bonds ratio. Instead, theyre adopting a 40/60 mix, allocating 20% each to U.S. and international stocks, and 60% to fixed income. This tectonic shift aims to better balance risk and reward, driven by high U.S. stock valuations, particularly in tech, and the potential for international stocks to deliver higher annual returns. Vanguard also sees bonds as a hedge against an AI letdown, which they estimate at a 25-30% chance. Financial planners have varied opinions on this approach for retirement savers, with some praising it for long-term investors and others warning against a one-size-fits-all strategy. Ultimately, this new setup promises the same expected returns with reduced volatility, helping investors achieve their goals with peace of mind.
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