Glossary · Investing and personal finance
60/40 portfolio
A 60/40 portfolio keeps 60% of the money in stocks and 40% in bonds: the classic balanced mix of growth and stability.
Also called: 60-40 portfolio, balanced portfolio, 60/40 stocks and bonds
Before inflation; 5.6% after. US stocks and 10-year Treasuries, reset every January.
In 1931. Losing years: 21 of 100.
December to December, before inflation.
In plain words
Put $6 of every $10 into stocks for growth and $4 into bonds for steadiness, and you have the most famous recipe in investing: the 60/40 portfolio. Pension funds, balanced mutual funds and many savers have used it for decades.
The idea: stocks do the heavy lifting over the long run, while bonds soften the falls and pay interest along the way. When stocks crash, high-quality government bonds have often held up or even risen.
Since 1926, a 60/40 mix of US stocks and 10-year Treasuries lost money in 21 calendar years out of 100. Its worst year was −24.6%, in 1931.
Example
$10,000 in a good year and a bad year
- Start: $6,000 in a stock index fund, $4,000 in a bond fund.
- Bad year: stocks −20%, bonds +5%. $4,800 + $4,200 = $9,000: −10%, half the fall of stocks.
- Good year: stocks +20%, bonds +2%. $7,200 + $4,080 = $11,280: +12.8%.
- Each January, sell or buy so the mix is 60/40 again (rebalancing).
It gets most of the gain in good years and takes about half the hit in bad ones, unless bonds fall at the same time.
One level deeper
Why 60/40? There is no magic in the numbers. It is a compromise that gave much of the stock market’s growth with far smaller swings, and over the second half of the 20th century it became the standard benchmark for balanced funds and pension plans.
It works best when bonds and stocks move apart. From about 2000 to 2020 they mostly did: stock crashes came with falling interest rates, which lift bond prices. When inflation is the problem, both can fall together. In 2022, as rates rose fast, the 60/40 mix returned −15.0%, its fourth-worst year since 1926.
Since 1871, the mix returned 7.9% a year before inflation and 5.6% after: less than all stocks, with much shallower falls. Variants swap in foreign stocks, shorter bonds or inflation-protected bonds, or change the split to 70/30 or 50/50.
Every year of a 60/40 portfolio since 1926
Calendar-year returns before inflation: 60% US stocks with dividends and 40% 10-year Treasuries, reset every January. Most years are gains; the bars below zero are the losses, from the 1930s to 2008 and 2022. The best year was +34.1% (1933).
The numbers behind the chart
| Date | 60/40, calendar year |
|---|---|
| 1926 | 11.0% |
| 1930 | −13.1% |
| 1940 | −4.0% |
| 1950 | 16.8% |
| 1960 | 4.3% |
| 1970 | 8.7% |
| 1980 | 16.6% |
| 1990 | 1.4% |
| 2000 | 2.7% |
| 2010 | 10.9% |
| 2020 | 15.1% |
| 2021 | 15.3% |
| 2022 | −15.0% |
| 2023 | 13.2% |
| 2024 | 18.4% |
| 2025 | 11.9% |
Why it matters
It is the yardstick that balanced funds, pension plans and robo-advisers are measured against.
It shows the basic trade of investing: give up some growth to make the falls smaller and easier to live through.
Whether bonds still cushion stocks, as they did for decades, has been one of the big debates in investing since 2022.
A common mistake
Myth: With 40% in bonds, a 60/40 portfolio cannot have a really bad year.
In fact: It can, especially when stocks and bonds fall together. It returned −24.6% in 1931, and −15.0% in 2022.
Questions people ask
Is the 60/40 portfolio dead?
It was declared dead after 2022, when stocks and bonds fell together and the mix returned −15.0%. It has had bad years before; what was unusual in 2022 was that bonds did not cushion the fall. In 2025, the latest full year, it returned +11.9%.
What is the average return of a 60/40 portfolio?
With US stocks and 10-year Treasuries rebalanced every January, 7.9% a year since 1871 before inflation, and 5.6% after. Our 60/40 portfolio page shows it decade by decade.
Is 60/40 the same as a balanced fund?
Many balanced funds use roughly a 60/40 split, but they can hold foreign stocks, corporate bonds or cash, and some change the mix over time. The name describes the idea, not a fixed rule.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- US 10-year Treasury bonds, total return index: Robert J. Shiller, Online Data (shillerdata.com), ie_data.xls, sheet "Data": "Long Interest Rate GS10", checked against "Monthly Total Bond Returns" and "Real Total Bond Returns".
- S&P Composite price and total return since 1871, and US consumer prices: Robert J. Shiller, Online Data (shillerdata.com); total return with dividends reinvested monthly, calculated by BigCapital.
- This page explains a term. It is not investment advice.