Your Risk Dial: 100% Stocks vs 60/40

Two portfolio pies, one all stocks and one split between stocks and bonds with drawdown lines beneath
A simple test of an all-stock portfolio versus a classic 60/40 stock–bond mix over the same period. How much return do you give up for a smoother ride?

TL;DR

  • 100% stocks aim for higher long-run growth but with sharper swings.
  • 60/40 cuts volatility and drawdowns by mixing stocks and bonds.
  • The real decision is risk tolerance and time horizon, not small differences in backtest numbers.

Method

We compare two simple portfolios built from US ETFs:

  • 100% Stocks: 100% SPY (US large-cap stock index).
  • 60/40 Mix: 60% SPY + 40% AGG (US aggregate bond index), rebalanced once per year.

Data modeled on monthly total returns (price + dividends), fees and taxes ignored.

This is a simplified illustration of behavior, not a precise replication of any specific account.

Notes

  • Both portfolios start at 1.00× and evolve using monthly returns.
  • 60/40 is rebalanced once per year to its target weights (60% stocks, 40% bonds).
  • Results depend on the period; change the window and the exact numbers move.
  • Educational only. Not personalized investment advice.

Key Chart

Normalized growth of 100% stocks versus a 60/40 mix. Both start at 1.00×; the gap shows what you “pay” or “save” in risk and return by turning the dial.

What the data says

In this stylized example, the all-stock portfolio compounds faster but swings more. The 60/40 mix trades some growth for a smoother ride by holding bonds alongside stocks.

The exact gap between the lines will change with different start and end dates. What doesn’t change is the basic trade-off: more stocks = more potential growth and deeper drawdowns; more bonds = slower growth and shallower drawdowns.

The summary table below uses the same paths as the chart: simple rules, not curve-fitting.

When 100% stocks may fit you

  • You have a long time horizon (10+ years) and can tolerate big swings.
  • You hold broad, low-cost stock index funds or ETFs.
  • You don’t expect to sell in the middle of a typical bear market.
  • You care more about maximizing long-run growth than smoothing the ride.

When 60/40 may be a better dial

  • You’re closer to using the money (retirement or large purchases).
  • Sharp drawdowns make you want to “do something” with your portfolio.
  • You prefer a smoother equity curve even if long-run returns are lower.
  • You want a simple default you can automate and leave alone.

The mix doesn’t have to be exactly 60/40. The real question is where you set your dial between “growth” and “stability” — 80/20, 70/30, 60/40, etc.

Summary

Series CAGR Max DD Worst 12-mo
100% Stocks 3.1% −9.2% −7.4%
60/40 Mix 1.7% −8.8% −7.5%

Numbers are illustrative and rounded. The point is the trade-off, not the exact decimals.

Ready to choose your own mix? You can implement 100% stocks or a 60/40 dial with just a few low-cost funds.

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Disclosure: We may earn a commission if you open an account using our links. You do not pay extra.

Want to test other mixes? Use TradingView to inspect different stock/bond ETFs and see how they moved through past drawdowns.

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Bottom line

You don’t have to guess which mix is “right.” The chart and table show how two simple dials behave. Your real edge is picking a risk level you can live with and sticking to it long enough for compounding to matter.

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