Here Are The 20 Best Income Portfolios Built with ETFs for 2023
If you're looking for income then you should look at this list of the 20 best income portfolios.
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.
How do you build the 60/40 portfolio with ETFs?
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.
Portfolio data was last updated on 11th of August 2023, 08:35 ET
| Name | Year to date | Return in 2022 | 10 year return | CAGR since 1989 (%) | Draw Down | Expense ratio | Yield |
|---|---|---|---|---|---|---|---|
| 60/40 Portfolio | 9.54 | -16.95 | 7.82 | 8.57 | -20.13 | 0.03% | 1.98 |
Here is what the table is showing you
Year to date: This shows what the portfolio has returned this year starting from the first trading day of the year.
10 Year return: This shows the compounded annualized growth rate over a ten-year period. The current year is excluded from calculations.
CAGR since 1989: This shows the compounded annualized growth rate since 1989. The current year is excluded from calculations.
Expense ratio: This shows the cost of holding the portfolio if you were to construct the portfolio using the proposed ETFs.
Yield: This is the expected dividend yield of the portfolio.
Please note that past performance is not a guarantee of future returns.
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.
| Name | See Portfolio | Year to date | Return in 2022 | 10 year return | CAGR since 1989 (%) | Draw Down |
|---|---|---|---|---|---|---|
| Ben Stein Retirement | Coming soon! | 4.05 | -18.03 | 9.46 | 10.8 | -35.42 |
| Paul Merriman 4-Fund-Portfolio | Coming soon! | 9.22 | -11.98 | 11.25 | 10.38 | -35.26 |
| S&P 500 | Coming soon! | 17.09 | -18.19 | 12.52 | 10.28 | -37.63 |
| Paul Merriman Target Date Portfolio (25 year old) | Coming soon! | 6.63 | -13.08 | 8.28 | 10.2 | -36.46 |
| Scott Adams Dilbert Portfolio | Coming soon! | 10.87 | -18.75 | 7.0 | 10.19 | -44.88 |
| JL Collins, Simple Path To Wealth, Wealth Building Portfolio | Coming soon! | 16.6 | -19.51 | 12.08 | 10.19 | -37.0 |
| American Institute of Individual Investors (AAII) Portfolio | Coming soon! | 3.74 | -13.91 | 9.7 | 10.16 | -40.85 |
| Paul Merriman Target Date Portfolio (35 year old) | Coming soon! | 6.57 | -13.22 | 8.31 | 10.08 | -36.35 |
| Assetbuilder.com Portfolio 14 | Coming soon! | 6.95 | -16.94 | 7.59 | 9.99 | -37.91 |
| Balanced Portfolio 90/10 | Coming soon! | 14.83 | -18.87 | 11.03 | 9.84 | -32.78 |
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.
Make sure you select the right ETFs!
There are a lot of ETFs! It is pretty boring 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 on the list.
We have done the work for you ** and its all for FREE!**.
We have carefully selected ETFs 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 (they need to be of the UCITS kind!).
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.
What are the advantages of the 60/40 portfolio?
Here are the advantages of the 60/40 portfolio
- 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 investment 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.
Here are the disadvantages of the 60/40 portfolio
- 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.
What are some 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
If you have already committed to a portfolio then maybe you need help maintaining the portfolio. In this case 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.
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 age 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.
