
Why A 60/40 Investment Strategy Is A Bad Idea In 2022?

When it comes to investment, there are hundreds of strategies that you can opt for. You can either diversify your portfolios by investing in long and short-term bonds, or you can put your entire revenue on a single asset and await a great turnaround. On the flip side, there is one more investment strategy that is relatively more popular than others. What is that, you may wonder? Well, it is called a 60/40 investment strategy. Essentially, there is no investment strategy that is all-encompassing. Every strategy has its pros and cons and as an investor, you must be okay with that.

Michael / Pexels / While there are hundreds of investment strategies, the 60/40 investment allocation is the most popular one.
Before we dive deep, let’s understand the term first. A 60/40 investment allocation strategy refers to a technique where investors hold 60% of their investment. The remaining 40% is invested in bonds. There is a widely accepted belief that a 60/40 investment allocation strategy is the most effective one.
Here is why:
- You are putting 60% of your investments in stocks; the remaining 40% goes into your bonds.
- The risk of loss is relatively lower than you would expect from other strategies.
- If you put 40% of your investments in bonds, you get the returns in the long run. Bit by bit, you get the turnaround that goes a long way.
- There is great potential for higher growth if you follow the 60/40 investment allocation strategy.

Energy / Pexels / The advantage of a 60/40 investment allocation strategy is that it is less risky and highly rewarding.
Thus, it goes without saying that if you follow the 60/40 investment allocation strategy, there are fewer chances that you will face any loss. That is one side of the coin. On the flip side, there are potential disadvantages of the 60/40 investment allocation strategy as well. That is what we are going to see in this article. We will analyze why a 60/40 investment allocation strategy is a bad idea in 2022.
The Minuses of a 60/40 Investment Allocation Strategy
According to highly qualified investors, a 60/40 investment allocation strategy is not a good idea in 2022. The reason they quote is twofold: Firstly, there is staggering inflation. Secondly, a looming recession awaits all investors. What lies ahead of them is uncertain.

Carlos / Pexels / With the looming recession and financial uncertainty in 2022, a 60/40 investment allocation strategy may not work for all investors.
Of course, if you are unsure about the future, taking a step can not take you any further. You may end up trapped in nowhere.
For instance, if you invested 60% of your investments in gold and the market price goes down the next day, you may find yourself in hot waters. This is why a 60/40 investment allocation strategy may not work for you – at least in 2022. It could be a great start under normal circumstances, though! But as the financial situation is heated this year, this may not be a favorable strategy for all investors.
Because the situation is pretty hard to handle, your investment journey may go south. So, it is better to stay away from a 60/40 strategy – at least for now.
More in Investments
-
`
Where Personal Financial Meets Mental Health – All You Should Know About Financial Therapy
You may notice that your money isn’t going as far as it used to, whether it’s at the grocery store, the...
December 1, 2022 -
`
Active Fund Managers Are Reluctant To Invest In Crypto
Virtual money is becoming more mainstream amid increasing attention on the market fuelled by the spectacular rise of bitcoin, the most...
November 30, 2022 -
`
This CEO’s Best Career Advice Is To Live Every Day Ready To Be Fired – Is It Worth Following?
Oftentimes, you come across career advice that either makes you or breaks you. It either helps you further your career, or...
November 26, 2022 -
`
Do Kwon’s Attempt At Reviving Luna 2.0 Token Didn’t Go As Planned
Welcome to the world of cryptocurrency where you might not be guaranteed profit but there’s one thing that you’ll be promised:...
November 25, 2022 -
`
Worried About The Looming Economic Slowdown? Here’s How You Can Recession Proof Your Business
The term “recession-proof” refers to industries or businesses that are generally immune to the negative effects of a downturn in the...
November 23, 2022 -
`
Here’s What To Not Add On Your Resume, According To Experts
The job market is finally opening up after the pandemic and people have started applying for jobs after a long break....
November 20, 2022 -
`
How Business Ownes Can Effectively Use The SaaS Escrow Agreement?
If you run a business – no matter how small or big – you already know that there is a crying...
November 19, 2022 -
`
How To Build An Emergency Fund
An emergency fund is a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Some common examples include...
November 13, 2022 -
`
Is The U.K New Prime Minister, Rishi Sunak, Richer Than The Royals?
The current prime minister of the United Kingdom breaks many norms of the U.K politics. To begin with, the new prime...
November 12, 2022
You must be logged in to post a comment Login