There's yet another ignorant take circulating in financial corners of the internet that I keep seeing. People are declaring the 60/40 portfolio “dead”. Insurance agents are posting comparisons between indexed life products and the 60/40 mix, claiming their IULs outperform. And it all sounds great at the surface but fortunately, they don’t make doesn't make much sense.

When you compare different portfolios and investment vehicles, they each come with their own risk profile. Acknowledging a different risk profile means you're acknowledging a different expected outcome. So to say one portfolio is great and another is bad without context about who is investing and why is simply not a sound way to analyze investing.

For anyone new to the concept, the 60/40 portfolio means 60% of your portfolio allocated to stocks and 40% to fixed income which historically has been bonds. It's a straightforward, simple structure that’s been a cornerstone of retirement-focused investing for decades. Not because it produces the highest returns, but because it serves a specific purpose for a specific type of investor.

The 60/40 approach makes the most sense for two groups of people.

The first: someone nearing retirement. If you're a few years out from leaving the workforce, you don’t want to have most of your savings exposed to market volatility. This is what's known as sequence of returns risk. If the market drops significantly right as you retire, you could be forced to sell assets at a loss to cover living expenses, with no time for your portfolio to recover.

In 2000, the S&P 500 fell 49% and in 2007, it fell 57%. Imagine you plan on retiring and your retirement is cut in half in a few months? In 2009, I had conversations with people who planned on retiring but couldn’t because their portfolios took too large of a hit during those market downturns. Some of those same people were still working in 2013 when the market finally returned to 2007’s peak.

More recently, I knew someone considering retirement in 2022 but was rattled by the S&P dropping 25% in that year. He continued to work because he feared if ‘23 and ‘24 yielded the same results it would impact his portfolio to the point he couldn’t maintain the lifestyle he desired during retirement.

The second group is investors that don’t like risks. What people forget is individual investing is for the purpose of the individual, no one else. Most investing talking heads forget there are different preferences and that the world of investing allows for all preferences. Some people are risk adverse and that’s ok. Not everyone is a hedge fund manager, and not everyone should be shooting for maximum market returns. Some people genuinely sleep better knowing a portion of their money isn't moving with the market. That's not a weakness. That's self-awareness, and it leads to better investing behavior.

A de-risked portfolio protects you as you approach retirement, when your focus shifts from maximizing gains to preserving and distributing your wealth. It also gives you peace of mind, so your financial security isn’t shaken by every headline flashing across CNBC’s ticker. Money set aside outside the market removes some uncertainty. The 40% in bonds serves a clear purpose: the U.S. has never defaulted on its bonds, making them an extremely low-risk place to keep funds you know you’ll need in the near term.

Comparing an indexed life product to a 60/40 portfolio, or any two investment vehicles, without accounting for their different risk profiles is like comparing a sedan to a pickup truck and declaring one "dead." They exist for different purposes. They serve different needs. Judging one against the other without that context isn't financial analysis, it's marketing.

The right question is never "which portfolio is best?" It's: "Which allocation gets me to my specific financial goals, at a risk level I can actually tolerate?" If a 60/40 split does that for you, great. If a 90/10 gets you there and you can handle the volatility, great as well. The risk with investing in a more aggressive allocation just because someone online says you should is you might not be able to hold through a major downturn, which defeats the purpose entirely.

There are no dead portfolio allocations. There are only allocations that fit you and allocations that don't. The 60/40 split isn't for everyone, but it remains a smart, rational choice for those approaching retirement or those who are genuinely risk-averse and still working toward long-term financial goals. Sometimes, we need time to build comfort with risk before we take on more of it. That's normal.

Ignore the hot takes. Build a portfolio based on your goals, your timeline, and your honest risk tolerance. That's what actually works.