Model portfolio · 60% stocks, 40% bonds · rebalanced every January
The 60/40 portfolio since 1871
60% in the S&P 500 with dividends, 40% in 10-year US Treasuries, brought back to that mix every January.
That's how much the purchasing power of $1 invested in Jan 1871 grew by Oct 2026: 5.6% a year after inflation (7.9% before) over 156 years.
Growth of $1 after inflation
What history says about this mix
It softens the falls. In the crash of 1929–1932 stocks lost 76.8% of their purchasing power; a 60/40 mix lost 48.4% and was back at its old peak after 6 years instead of 7 years. In 2008 it lost 17.0% after inflation, against 39.3% for stocks.
It is simple and needs no forecasts. Once a year the mix is brought back to 60/40: some of whatever rose is sold and whatever fell is bought. Variations of it have long been a standard choice for balanced funds and pension plans.
The price is slower growth. Since 1871 the 60/40 mix returned 5.6% a year after inflation against 7.1% for stocks alone, so the purchasing power of $1 grew 4,833 times instead of 44.2K times. Over a typical 30-year stretch (the median of all of them) purchasing power grew 4.6 times, against 7.14 times for stocks.
Bonds are no shelter from inflation. In the 1970s both lost purchasing power: 1.1% a year for 60/40, 1.4% for stocks. From Jan 1941 to Sep 1981 bonds alone lost 58.2% of their real value. And in 2022 stocks and bonds fell together: after inflation stocks lost 20.1%, bonds 20.2%, and the 60/40 mix 20.1%.
Worst calendar years after inflation: 1917: −27.7% · 1974: −23.9% · 2022: −20.1% · 1937: −19.6% · 1946: −19.0%
10-year returns after inflation, month by month
Each point is the average yearly real return over the 10 years ending that month. Below zero, a decade of holding lost purchasing power.
By decade: yearly return after inflation
| Decade | 60/40 | Stocks | Bonds | Inflation |
|---|---|---|---|---|
| 1870s | 10.5% | 10.9% | 9.2% | −2.8% |
| 1880s | 7.8% | 8.3% | 6.5% | −2.2% |
| 1890s | 5.0% | 5.6% | 3.7% | 0.1% |
| 1900s | 5.2% | 7.7% | 0.5% | 2.4% |
| 1910s | −2.1% | −1.9% | −2.9% | 6.6% |
| 1920s | 12.8% | 16.3% | 6.4% | −0.9% |
| 1930s | 5.0% | 2.1% | 6.1% | −2.0% |
| 1940s | 1.1% | 3.4% | −2.9% | 5.4% |
| 1950s | 9.8% | 16.7% | −1.2% | 2.2% |
| 1960s | 3.2% | 5.1% | −0.1% | 2.5% |
| 1970s | −1.1% | −1.4% | −1.5% | 7.4% |
| 1980s | 10.0% | 11.6% | 7.3% | 5.1% |
| 1990s | 10.9% | 14.6% | 4.9% | 2.9% |
| 2000s | 0.6% | −3.2% | 4.1% | 2.5% |
| 2010s | 7.9% | 11.4% | 2.1% | 1.8% |
| 2020s* | 4.8% | 11.1% | −4.9% | 4.0% |
December to December, monthly averages; the 1870s start in Jan 1871; * the 2020s run to Oct 2026.
All mixes compared
| Stocks/bonds | $1 became, real | A year, real | A year, nominal | Worst fall, real | Worst 10 years | Worst 20 years | Losing 10-year periods |
|---|---|---|---|---|---|---|---|
| 100/0 | ×44.2K | 7.1% | 9.4% | −76.8%Sep 1929 – Jun 1932 | −5.9%Mar 1999 – Mar 2009 | −0.2%Jun 1901 – Jun 1921 | 11.0% |
| 80/20 | ×16.2K | 6.4% | 8.7% | −64.7%Sep 1929 – Jun 1932 | −4.2%Jun 1911 – Jun 1921 | −0.2%Jun 1901 – Jun 1921 | 10.2% |
| 60/40 | ×4,833 | 5.6% | 7.9% | −48.4%Sep 1929 – Jun 1932 | −3.8%Jun 1911 – Jun 1921 | −0.3%Mar 1962 – Mar 1982 | 9.9% |
| 40/60 | ×1,177 | 4.6% | 6.9% | −43.5%Dec 1915 – Jun 1920 | −3.8%Jun 1972 – Jun 1982 | −0.9%Sep 1961 – Sep 1981 | 11.7% |
| 0/100 | ×37.5 | 2.4% | 4.5% | −58.2%Jan 1941 – Sep 1981 | −5.4%Sep 1971 – Sep 1981 | −2.6%Sep 1961 – Sep 1981 | 28.5% |
$1 invested in Jan 1871, value in Oct 2026 in today's dollars. Worst 10 and 20 years: the lowest yearly real return over all 10- and 20-year periods, starting in any month. Losing 10-year periods: the share of them that ended with less purchasing power.
Each mix in detail
100% stocks · 80% stocks, 20% bonds · 40% stocks, 60% bonds · 100% bonds
All portfolios compared · Try any period in the time machine
How it is calculated
- Rebalancing. The portfolio starts in Jan 1871 at its target mix; every month stocks and bonds earn their own returns, and every January the mix is reset to the target. No money is added or taken out.
- Stocks are the S&P 500 with dividends reinvested monthly; bonds are a 10-year US Treasury bought new every month, coupons reinvested (both from Robert Shiller's data). Before 1957 the stock index is a reconstruction: the Cowles Commission index, then the S&P 90.
- Monthly values. Prices and yields are monthly averages; worst falls and the worst 10- and 20-year periods are measured month by month, so falls inside a month are not seen. Calendar years run from December to December.
- Early bonds are smoothed. Before April 1953 the bond yield is one value per year, interpolated by month, so the monthly swings of bonds, and of the mixes, are understated before then.
- Today's dollars are Oct 2026 dollars: a value is multiplied by the rise in US consumer prices (CPI-U; before 1913 the Warren and Pearson reconstruction) from its date to Oct 2026. “Real” returns are after this inflation.
- No taxes, fees or spreads. Real investors paid commissions, fund fees, and taxes on dividends, coupons and gains, so they kept less than shown here.
- Preliminary data. S&P 500 dividends from July 2026 on are estimated from the last known value. Shiller's notes on the latest month: Oct price is Oct 2nd close; Sept/Oct CPI estimated; Oct GS10 is Oct 2nd value.