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Adding up a 20% tip on your wristwatch calculator.

Answering a 40-question survey on your typewriter.

Investing 60% of your savings in stocks and the rest in bonds.  

Those three things have something in common: They made sense in the 1970s.

Today, they’re exceptionally outdated. Yet that last one remains as popular today as ever…

The 60/40 Portfolio Isn’t Just Outdated—It’s Also Dangerous

Unfortunately, if you have a 60/40 portfolio, you aren’t just being passéyou’re also putting your retirement at huge risk.


Investing only 60% of your money in stocks will probably cause you to run out of retirement income.

You see, people who are retiring today are living a lot longer than people who retired in the 1970s.

Bonds just aren’t generating enough income to sustain decent lifestyles for several decades.

What’s the New Allocation Formula?

“Okay, so maybe my 60/40 portfolio is outdated. What’s the 2015 formula for successful investing?”

Even in the 1970s, when the 60/40 portfolio was a good one-size-fits-all recommendation, it was still just a guideline.

According to a recommendation by Rebalance IRA and USA Today’s George Petras, Americans should invest most of their money in stocks earlier in life and invest most of their money in bonds later in life.

He suggests that only in your 70s or later would you want to start investing 40-60% in bonds.

I couldn’t disagree more!

I believe what Nick Murray says in his book Simple Wealth Inevitable Wealth—that stocks are not just part of the answer later in life, “they are the only answer because—net of inflation and taxes—they’re the only financial asset that has any return. Not just a better return, mind you: any return.” Check out my latest short videos on this topic: Be An Loaner Not A Loaner.

If your goals are to have an income you don’t outlive in a dignified and independent retirement and to leave meaningful money to your children and grandchildren, then your lifetime portfolio must consist of rising-income investments that beat inflation—businesses or shares of business, or rental real estate.

Americans should invest most of their money in stocks of good companies throughout their life, and in retirement, maintain two to three years of emergency cash to protect from, and take advantage of, higher stock volatility. But invest the rest in stocks of good companies at the lowest cost possible—using low-cost index funds or better yet, a commission-free, separately managed account (SMA) in which you own stocks of good companies directly.

This is the First Step to Getting on the Right Track

“How do I know the above recommendation is right for me?”

Great question!

The answer is that you don’t. Again, even the new recommendations are just that: recommendations. You have to make sure they’re tailored to your lifestyle needs and that the advisor has incentives aligned with your best interests.

Let’s say you sit down with an advisor at your brokerage or bank and ask for some advice on how you should allocate your savings.

You’ll get lots of advice that might not be worth much. Eighty-five percent of all financial advisers and financial planners are really just brokers or salesman. Their bias is to sell you a product that makes them a higher commission, not something that is intended to maximize your lifetime returns. Only 15 percent of advisers are “fiduciaries”—advisers who by law must operate with your best interests in mind.

Make sure your advisor is a fee-only Registered Investment Advisor (who is a fiduciary)! That’s the only way to know for sure that you are the only one paying the professional you’re investing in financial products that will help you reach your goals.

As part of my role as a fiduciary financial advisor, I offer a complimentary financial check-up that can help you understand where you’re going. The best part? It takes less than 15 minutes!

You can schedule your financial check-up with me here. It could be the first step in bringing your retirement into the 21st century.