Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher shares his thoughts on the conventional recommendation of a 60% equities/40% fixed income portfolio and its viability for most investors. As Ken details, a 60/40 portfolio is likely not the best approach to help most long-term investors achieve their goals. According to Ken, longer investment time horizons require a higher proportion of equities—and time horizons are often longer than investors expect. With longer time horizons, not having enough equities in your portfolio could increase the risk of running out of money in retirement for some investors.
Ken believes an investor’s time horizon and goals are key factors in determining a suitable investment asset allocation. Ken says equities have historically outperformed fixed income over long time horizons—20, 25 or even 30 years—making them a better choice for investors with long-term goals. Ken thinks investors should primarily use fixed income in their portfolios to dampen short-term volatility. Therefore, a higher proportion of fixed income might make sense for investors with shorter time horizons or goals.
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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.
