Investors are facing challenges with the recent bond market downturn. The 2020s saw the worst market crash in 150 years, impacting a 60/40 portfolio more than all-equity portfolios. The stock market will recover, but timing can impact retirement plans. Diversification can mitigate losses during market crashes.

Past 150 years have seen 19 bear markets for stocks and three for bonds, translating to 11 for a 60/40 portfolio. Historical data shows the growth difference between stocks and a 60/40 portfolio. The 60/40 portfolio experienced less pain during market crashes compared to all-equity portfolios.

Market downturns like the Great Depression and the dot-com bust affected both stocks and the 60/40 portfolio. The pain index indicates the severity of market crashes. The current market decline due to Russia-Ukraine War and inflation has led to a downturn in both stocks and bonds.

The 60/40 portfolio has historically weathered market downturns better than all-equity portfolios. Even during severe market crashes, the 60/40 portfolio experienced less pain. Diversification remains crucial for navigating market uncertainties and long-term investment success. Data from Paul Kaplan and Hal Ratner.

Read more at Morningstar: How the 60/40 Portfolio Held Up