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A 90/10 stocks/bonds portfolio will outperform a 100/0 portfolio over the long term. During a market downturn money flees to safety, bonds appreciate, stocks f
by rrrrrrrrrrrryan 3y ago
A 90/10 stocks/bonds portfolio will outperform a 100/0 portfolio over the long term.
During a market downturn money flees to safety, bonds appreciate, stocks fall, and when you rebalance back to 90/10 you'll effectively be buying stocks at a discount.
The 100/0 guy has no such option and misses out entirely.
- velcrovan 3y ago> The 100/0 guy has no such option and misses out entirely. Not true. The 100/0 guy can buy stocks during a downturn just as well as the 90/10 guy. If we're really talking long term, that is, if neither person is selling, and if both are investing the same amounts regularly, then on average the 100/0 portfolio will outperform the 90/10 portfolio. Looking at history, the reason to go with anything besides 100/0 over the long term has to do with risk tolerance, not performance. https://investor.vanguard.com/investor-resources-education/education/model-portfolio-allocation https://investor.vanguard.com/investor-resources-education/e...
- naniwaduni 3y agoMost people can't do 100/0 because they're structurally overweighted on a single weird illiquid asset that pays out more distributions than the rest of their assets combined.