What is a 60/40 portfolio?

A balanced allocation of 60% stocks and 40% bonds. Stocks provide growth; bonds aim to reduce volatility and cushion stock downturns.

Is the 60/40 portfolio dead?

No, 2022 was a rare year when stocks and bonds fell together due to inflation and rising rates, but over longer periods the stock/bond mix still meaningfully reduces drawdowns versus all-stock. The right answer depends on your timeline, which you can test directly.

What returns has a 60/40 portfolio delivered historically?

Long-run returns have typically landed between stocks and bonds, with materially smaller drawdowns than all-stock. Exact figures depend heavily on the period: run your own dates in the backtester for precise, dividend-reinvested numbers.

The 60/40 Portfolio: Returns, Drawdowns, and Whether It Still Works

6 min read · Updated 2026-06-15

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The 60/40 portfolio (60% stocks, 40% bonds) is the default “balanced” allocation that's anchored retirement plans for decades. The idea is simple: stocks supply growth, bonds supply ballast, and when stocks fall, bonds are supposed to cushion the blow.

After 2022, plenty of headlines declared it dead. Here's what the history actually shows, why 2022 was different, and how to test a 60/40 on your own timeline instead of trusting a headline.

Backtest a 60/40 portfolio →

Why 60/40 works (most of the time)

Stocks and bonds usually don't move in lockstep. In a typical recession, stocks fall but high-quality bonds hold or rise as interest rates drop, so a 60/40 falls far less than an all-stock portfolio, and recovers faster. That smoother ride is the whole point: a portfolio you can actually hold through a downturn beats a “better” one you panic-sell.

How it held up through the big crashes

Rough, approximate behavior (run the exact figures for your own dates in the backtester):

•2008 to 2009: a 60/40 fell roughly 20 to 30% peak-to-trough, versus a ~50%+ drop for an all-stock portfolio. Bonds did their job.
•2020 COVID crash: a fast, deep stock drop and an equally fast recovery; a 60/40 dipped far less and was back to even within months.
•2022: the hard one. Stocks and bonds fell together as inflation spiked and rates rose sharply: a 60/40 lost in the mid-teens, with bonds providing little cushion.

Peak-to-trough drawdowns: all-stock vs 60/40 (approximate)

2008 to 2009 · All-stock

−51%

2008 to 2009 · 60/40

−29%

2020 · All-stock

−34%

2020 · 60/40

−12%

2022 · All-stock

−25%

2022 · 60/40

−17%

Rough, illustrative magnitudes: exact figures depend on the funds and dates. Run your own in the backtester.

Why 2022 broke the script

The 60/40's magic depends on stocks and bonds being uncorrelated. In 2022 that broke: surging inflation forced rapid rate hikes, which hit both stocks and bonds at the same time. It was a rare year where the ballast sank with the ship.

The lesson isn't that 60/40 is dead; it's that the stock/bond hedge isn't guaranteed in every regime, especially an inflationary one. That's exactly the kind of assumption worth testing rather than trusting.

Who 60/40 is (and isn't) for

A 60/40 suits investors who want meaningful growth but can't stomach the full swings of an all-stock portfolio, often those within ~10 to 15 years of needing the money. Younger investors with a long runway may want more in stocks; retirees drawing income may want to think about sequence-of-returns risk and cash buffers, not just the 60/40 split.

Test it on your own numbers

Instead of arguing about whether 60/40 is dead, run it. Backtest a 60/40 over the period that matters to you, stress-test it against 2008/2020/2022, and compare it to a 70/30 or an all-stock mix on the same chart. The point isn't the perfect allocation; it's one you understand well enough to hold.

Try it yourself

Backtest a 60/40Run a 60/40 on real data and compare it to other mixes.Open tool →Stress TestSee how a 60/40 holds up through 2008, 2020, and 2022.Open tool →Efficient FrontierFind the best stock/bond mix for your risk level.Open tool →

FAQ

What is a 60/40 portfolio?: A balanced allocation of 60% stocks and 40% bonds. Stocks provide growth; bonds aim to reduce volatility and cushion stock downturns.
Is the 60/40 portfolio dead?: No, 2022 was a rare year when stocks and bonds fell together due to inflation and rising rates, but over longer periods the stock/bond mix still meaningfully reduces drawdowns versus all-stock. The right answer depends on your timeline, which you can test directly.
What returns has a 60/40 portfolio delivered historically?: Long-run returns have typically landed between stocks and bonds, with materially smaller drawdowns than all-stock. Exact figures depend heavily on the period: run your own dates in the backtester for precise, dividend-reinvested numbers.

Key terms in this guide

Plain-English definitions in the Learning Hub.

Maximum drawdown →Volatility (annualized standard deviation) →Correlation →CAGR (Compound Annual Growth Rate) →

Already computed · real data

60/40 vs all stocks on real data

Side by side, same dates

The 60/40 mix (VTI 60%, BND 40%) grew from $10,000 to $42,003 between May 2007 and Oct 2026 (7.6% a year). Its worst fall was -31%, from Oct 2007 to Feb 2009, and it took 39 months (about 3 years) to get back to that high. All stocks (VTI 100%) grew from $10,000 to $72,870 between May 2007 and Oct 2026 (10.7% a year). Its worst fall was -51%, from Oct 2007 to Feb 2009, and it took 53 months (about 4 years) to get back to that high.

Real 2007-05 to 2026-10 data, dividends reinvested, rebalanced yearly. Past performance doesn't predict future results.

Growth of $10,000, May 2007 to Oct 2026

The 60/40 mix (VTI 60%, BND 40%)All stocks (VTI 100%)

Run 60/40 with your own numbers →Run all stocks with your own numbers →

Keep watching one of them, free: 60/40 or all stocks. A free account saves it as your plan and checks it for you every month.

For educational and informational purposes only, not financial, investment, tax, or legal advice. Backtests are hypothetical; past performance does not guarantee future results.