The Death of the 60/40 Portfolio: Why the Old Wealth Playbook No Longer Works
The Death of the 60/40 Portfolio
You wouldn’t run your company on a fax machine or build your brand on dial-up internet. Yet many people still build their wealth like it’s 1985. The traditional 60/40 stock-and-bond portfolio was designed for a different era - when interest rates were steady, pensions were common, and market volatility was low. Today, constant volatility and macroeconomic shocks are the norm. In this environment, a “balanced” 60/40 portfolio can feel anything but balanced. In 2022, for example, both stocks and bonds sank together, breaking the old assumption that bonds will cushion stock losses.
Many high-income entrepreneurs sense something is off with this approach. They’re living in a modern world, running companies from smartphones and using AI tools, but their investment strategy is stuck in the past.
Why the 60/40 Portfolio Is Showing Cracks
For entrepreneurs and professionals, the standard 60/40 mix often fails to meet their needs. Here are a couple of big reasons this once “safe” strategy is losing its shine.
No Control and High Volatility: Your 60/40 wealth is at the mercy of market swings, news headlines, and Fed moves. As a business builder, it’s frustrating to watch external events erode your portfolio’s value overnight while you have zero say in the matter.
Diminished Returns, No Real Assets: After taxes, fees, and inflation, the real returns of a 60/40 portfolio often disappoint. And what do you own? Pieces of paper. You’re not holding any tangible assets that generate cash or offer special tax breaks. In short, you’re getting mediocre net growth and nothing solid to show for it.
The traditional portfolio feels increasingly fragile in a world of higher uncertainty. The 60/40’s past success was built on conditions (like low inflation) that just don’t hold true anymore.
What Savvy Investors Do Instead
The ultra-wealthy adjusted course long ago. Many allocate large portions of their portfolios to alternative assets like private equity and real estate. U.S. family offices, for example, target roughly 20% to private real estate – treating it as a core holding, not a sideline. They know true diversification means owning assets beyond stocks and bonds. Real estate in particular is tangible, produces income, and offers a degree of control that paper assets can’t match.
One asset class in particular has earned a strong reputation for its balance of income, growth, and resilience: multifamily real estate.
Why Multifamily Real Estate Can Supercharge Your Portfolio
Among private investments, multifamily apartment buildings (especially mid-market “workforce” housing) stand out as a powerful wealth builder. Here’s why savvy investors are shifting capital into multifamily:
Passive Income: Apartments generate consistent monthly rent. By investing in a multifamily syndication as a limited partner, you receive your share of that income without having to manage any properties yourself. It’s reliable cash flow – your money works for you while you focus on your business or family.
Equity Upside (Value-Add): Multifamily allows investors to force appreciation. Renovating units, improving operations, or adding amenities increases the property’s income and value. When the building is refinanced or sold, investors reap the rewards of that forced equity growth – upside you helped create, not just the luck of market timing.
Stable & Inflation-Resistant: Housing is a basic need, so apartment demand stays steadier than stock markets through ups and downs. Even when the economy dips, people need a place to live – and when the cost of living rises, rents typically rise too. That means multifamily tends to remain resilient in recessions and can help preserve your purchasing power when prices climb.
Major Tax Benefits: The tax code heavily favors real estate investors. Through depreciation and other deductions, multifamily owners can often shelter a large portion of their rental income from taxes. You keep more of what you earn – unlike stock investors who owe taxes on dividends, interest, and capital gains with few write-offs.
It adds sources of cash flow, equity growth, diversification, and tax efficiency that a stocks-and-bonds mix lacks.
A Modern Wealth Portfolio for Modern Times
Clinging to the 60/40 portfolio now is like using outdated software in the age of cloud computing. The world has changed. For entrepreneurs and high-net-worth individuals, building wealth today means demanding more control, more predictable income, and greater resilience against market swings. Multifamily real estate is quickly becoming a cornerstone of that modern strategy.
If you’re looking to upgrade your own wealth playbook, consider what adding multifamily investments could do for your financial future. Interested in learning more? You can download our Passive Wealth Playbook or book a quick call with our team to discuss upcoming multifamily opportunities here. You’ve embraced innovation in your business – now it’s time to bring innovation to your portfolio. Your future self will thank you.
