Learn To Build The 60/40 Portfolio With ETFs

Learn to build the 60/40 portfolios with 2 ETFs. See how it compares to other portfolios.
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What is the 60/40 portfolio?

The 60/40 portfolio is composed of 60% stocks and 40% bonds. The 60/40 portfolio is the standard when comparing balanced portfolios. It is a medium-risk portfolio.

The 60/40 portfolio is exposed to 60% stocks and 40% bonds. It is a medium-risk portfolio and can be built with 2 ETFs. For the past 10 years, it has returned 9.94 with a standard deviation of 10.75. The dividend yield is 1.68%. The 30 year return is 9.29%. Last year it returned 15.7%.

How do you build the 60/40 portfolio?

Here is how you build the 60/40 portfolio with ETFs:

  • 60.00% Total US Stock Market (VTI)
  • 40.00% Total US Bond Market (BND)

The letters in brackets denote the stock symbol for the recommended ETF. You can look up the symbols at your stockbroker. You can see a listing of all the ETFs we recommend on this page.

What is the historical return of the 60/40 portfolio?

Here is the historical return of the 60/40 portfolio.

Data was last updated on November 1, 2021 at 05:33 a.m. ET

NameAsset class countYear to dateReturn in 202010 year returnCAGR since 1989 (%)Risk levelExpense ratio
60/40 Portfolio213.02%15.79.949.2920.03%

How does the 60/40 portfolio compare to the best portfolios?

Below you can see the returns of the best portfolios that we have benchmarked.

NameSee PortfolioYear to dateReturn in 202010 year returnCAGR since 1989 (%)Draw Down
Premium Portfolio24.08%18.2913.8410.77-37.63%
Premium Portfolio12.81%18.118.6311.14-44.87%
Premium Portfolio20.42%19.712.8410.49-32.77%
Premium Portfolio23.66%3.198.5210.59-36.46%
Premium Portfolio23.23%3.668.6210.48-36.35%
Premium Portfolio22.88%21.0313.7810.83-37.00%
Premium Portfolio24.73%8.711.5610.65-35.26%
Premium Portfolio18.96%7.488.3910.64-37.91%
Premium Portfolio24.34%5.3610.8811.23-35.43%
Premium Portfolio26.10%3.4210.2110.47-40.85%

What is the 60/40 investment portfolio?

The 60/40 investment strategy involves building a portfolio that is allocated 60% to equities and 40% to bonds. The most straightforward implementation of the strategy would be to buy the S&P 500 and U.S. Treasuries.

In theory, a 60/40 mix allows you to maintain balance in your portfolio when the market is high, and when it’s low. It’s’s designed to minimize risk while generating a consistent rate of return over time, even during periods of high volatility.

The main advantage of a 60/40 portfolio is that the bond allocation moderates the risk of the portfolio.

It is very much a sleep well portfolio.

Here is how we select the right ETFs

There are a lot of ETFs! It is laborious work to sift through hundreds and hundreds of ETFs just to find the right one, but it is worth it!

Finding the right and BEST ETF could earn you a lot more money than number two.

We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?

If you are a European investor you need to buy European ETFs. We have listed 47 of the best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).

As of 2021 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social, and corporate governance issues.

You can find the socially responsible investing ESG ETFs in the same article.

What is the portfolio allocation for the 60/40 investment portfolio?

Below you can see how to build the 60/40 portfolio using best-in-class ETFs.

NameESG portfolio available?Total US MarketTotal Bond Market
60/40 PortfolioYes60.00%40.00%

What are the advantages of the 60/40 portfolio?

Advantages:

  • The 60/40 investment portfolio is easy to implement (it has only two funds).
  • The 60/40 portfolio is easy to maintain and rebalance.
  • It is a very low-cost portfolio. The fund uses some of the cheapest and most liquid ETFs.
  • It generates a respectable return over long periods.
  • It can easily be adapted to serve any risk tolerance.
  • It does not have large drawdowns (low volatility)  because of the substantial bond portion of the portfolio.

Disadvantages:

  • The classic 60/40 portfolio may not offer enough return to meet your financial goals. This is due to the large bond portion of the portfolio. Bonds typically have lower returns than stocks.
  • It has done very well in the past due to falling interest rates and therefore rising bond prices. This may not repeat itself.
  • The investment portfolio may be considered “boring” and unsexy. You’re not going to get a lot of attention at parties talking about your investment portfolio!
  • The portfolio may not offer enough exposure to the international stock market.

Alternatives to the classic 60/40 portfolio

There are many alternatives to the 60/40 portfolio. The first place to look is to look at other balanced funds that hold only stocks and bonds. Have a look at our article The Balanced Portfolio: Portfolio Grand Daddy. In the article, we go through a lot of the other balanced portfolios.

Another alternative is The Coffeehouse portfolio. This portfolio holds more asset classes but is still a 60/40 portfolio.

Vanguard LifeStrategy portfolios are 60/40 portfolios. They have international exposure as well.

William Bernstein also has 60/40 portfolios.

The Three Fund Portfolio can also have a 60/40 portfolio. It also has international exposure.

Rick Ferri’s Core 4 portfolios have a few 60/40 portfolios. We like Rick Ferri’s portfolios a lot.

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may provide higher returns in the long run. It is completely FREE.

You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool.

Rebalancing lowers your portfolio risk and may increase your returns.


If you want access to our high-performing portfolios then you need to take a look at the premium portfolios. This is a paid product that gives you the 59 best-performing portfolios since 1989. The portfolios represent a great opportunity for you to have a shot at increasing the returns of your portfolio.

Portfolioeinstein Premium Portfolios

Related questions

What is considered a moderate portfolio allocation?
A 60/40 allocation is considered a moderate portfolio. A moderate portfolio is suitable for an investor with a medium risk profile.

What should my portfolio look like at 60?
A good starting point is holding your age minus 100 in bonds. This means that for a 60-year-old, 40% of the portfolio should be in stocks. The rest would comprise of high-grade bonds, government debt, and other relatively safe assets.

What is the ideal asset allocation?
Your ideal asset allocation is typically a mix of cash, bonds and stocks. If you have a short timeframe you should hold bonds and cash. If you have a longer timeframe you should hold stocks.

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