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The 60/40 Investment Strategy: Rebounding After a Tumultuous Year

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Learn about the classic 60/40 investment strategy and its resurgence in popularity after a challenging 2022.

description: an image of a balanced scale, representing the balanced approach of the 60/40 investment strategy.

The recovery has emboldened investors who didn't stray from the approach during 2022's market tumult. Despite market volatility, the 60/40 investment strategy is historically one of the most popular investing strategies, and for good reason. This classic strategy features an allocation of 60% stocks and 40% bonds, providing investors with a balanced portfolio that can weather market storms.

The classic 60/40 investment strategy is rebounding, providing relief to the portfolios of millions of Americans planning for retirement. This strategy is particularly appealing to retirees who are looking for a steady income stream while still participating in the stock market's upside potential.

When it comes to investing, there are some tried-and-true formulas for "success" that have held fast over time: buy low and sell high, diversify your portfolio, and stay invested for the long term. The 60/40 investment strategy embodies all of these principles, making it a popular choice among investors.

The 60/40 investment strategy proved a disappointment for some investors last year, but LPL Financial says things are brightening up. The strategy has historically performed well during times of market volatility, and with the market stabilizing, investors are once again turning to this tried-and-true approach.

From the 1980s until recently, a portfolio of 60% stocks and 40% bonds experienced a "golden age"—and for good reason. This strategy has been shown to provide solid returns with lower volatility than an all-stock portfolio, making it a popular choice among investors of all ages.

Perhaps no development caught investors off-guard last year more than the failure of the tried-and-true diversification strategy of owning both stocks and bonds. However, experts still believe that diversification is key to a successful investment strategy, and the 60/40 approach remains a popular choice.

Strategists say the classic split between stocks and bonds still makes sense, though some are tweaking the mix. With interest rates at historic lows, investors may want to consider adjusting their bond allocation to include alternative fixed-income investments, such as high-yield bonds or emerging market debt.

Of all the choices an investor has to make, asset allocation could be the most important. Deciding how to split up the money you invest between stocks and bonds can have a significant impact on your investment returns over time. The 60/40 investment strategy is a simple, yet effective way to balance risk and reward in your portfolio.

60/40 investment strategystocksbondsdiversificationportfolioretirementallocationvolatilitylong-termalternative fixed-income investments
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