60/40: Down, Not Out

Talking Real Money - Investing Talk

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20d ago 41:37

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Don and Tom defend the long-maligned 60/40 portfolio, diving into a 150-year Morningstar study that reveals its lower volatility and emotional survivability—even if it underperforms an all-stock portfolio over time. They tackle fixed indexed annuities head-on, debunking the myth of market returns without risk, citing high commissions, surrender charges, lack of liquidity, and poor transparency. Several listener calls highlight confusion over annuity strategies and Roth vs. pre-tax retirement contributions, including a deep dive from a New York City teacher juggling pensions, 403(b)/457 plans, and Roth conversions under new IRS rules. The show wraps with a playful rant about birthday freebies and a PBS show rec (“Mr. Bates vs. the Post Office”).

0:04 The truth about balanced portfolios and the 60/40 myth

1:50 Why bonds failed in 2022—and what 150 years of history say about diversification

3:27 Bear markets: 60/40 vs. all stocks during crises like the Great Depression

4:53 Trade-offs: long-term growth vs. sticking with the plan

6:49 Financial Flinch Reflex: the PSA ad returns

7:09 Caller John asks: “What’s so bad about fixed indexed annuities?”

8:00 Don unloads: high fees, misleading returns, and awful disclosures

10:11 John presses for alternatives: what’s safe and simple with decent return?

13:02 Don’s CD ladder strategy vs. annuities

15:08 Why opacity, commissions, and complexity make these products unsuitable for most

16:21 Caller Charles: a planner wants to manage his annuity—for a fee

17:21 Why even “fixed” annuities might not belong in fiduciary portfolios

20:47 The growing gray area: commissions vs. fiduciary care

22:17 Ranking annuities: worst to best (indexed, variable, fixed, immediate)

24:58 Summary: “Lazy products” sold for commission, not client success

26:39 Caller Brian: NY teacher strategizes 403(b), 457, Roth, and future pension

28:29 Navigating new Roth rules, Rule of 55, and using a 7% fixed option

30:15 Don and Tom: stick with pre-tax now, convert later in lower-bracket retirement

33:02 Mechanics of Roth catch-ups: plan providers still in the dark

35:29 Birthday freebies! Tacos, cookies, burgers… and existential dread

36:57 Red Robin, Denny’s, and the pursuit of the free Grand Slam

38:06 Book chat: Don’s still slogging through the Franklin bio

39:13 Must-watch: Mr. Bates vs. the Post Office on PBS

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60/40: Down, Not Out

Talking Real Money - Investing Talk

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published 20d ago