Living to 100 years as standard?

The aforementioned investment model of redistribution of joint-stock companies and bonds in a 60/40 portfolio is based on the fact that the stocks in the portfolio benefit from growth and the bond part fulfils a certain function of an income buffer and diversifies in times of decline.  The 60 to 40 model gained its popularity especially during several crises, including the dot-com bubble and the mortgage crisis in 2008. The premise has always been simple. In the event that stocks do not do well, bonds will effectively compensate for such a decline with their performance, but 2025 reveals that this pattern may not work as reliably as investors have been used to so far in the current market environment.

It is currently facing increasing criticism, not only because of the reduced ability of bonds to perform a protective function, but especially because of a fundamental change in demographic reality. With the current trend of medical progress, life expectancy should increase significantly.

In the past, yes, probably not in the future

An unpleasant awakening for investors was the April changes in US trade policy. Specifically, it was an initial increase in reciprocal tariffs for many of the United States' key partners, with fiscal stability being and still is a second, but equally fundamental, risk. In this context, the need to revise the established investment approach is increasingly discussed.

In an interview with the CNB, Ric Edelman, the former head of Edelman Financial Engines, emphasized that investors should plan their investment strategies with a time horizon of up to 100 years, which understandably requires a much higher share of stock titles. According to him, the dynamic component of the portfolio should reach a level in the range of 70 to 80% in percentage terms. In addition, it is essential to note that the longer the time frame you give your investments in the stock market, the more likely you will ultimately increase the likelihood of success.

How does Goldman Sachs see the situation?

Wall Street itself reacted relatively quickly to what was happening. One of the most influential voices in the world of finance, Goldman Sachs, in his statements supported the idea of diversification between alternative assets such as gold and oil. Gold, as a traditional safe haven, potentially protects investors in the event of a loss of confidence in central banks, as well as fears of disruption of fiscal discipline. On the other hand, oil, to help cushion supply shocks, which in most cases are triggered by geopolitical conflicts or natural disasters.

According to Goldman Sachs' calculations, combining these assets can reduce portfolio volatility from 10% to less than 7% per year, which can definitely be a key difference for long-term investors. [1]

What to expect from gold?

The yellow metal received criticism from many analysts during 2020 to 2023, mainly due to the fact that although it fulfills its role as a safe store of value, the trend is unfortunately neutral in terms of the price development itself. However, this handicap of gold has been easily erased by the current price development, as gold has managed to grow by more than 70% since the 2023 low, while also surpassing the psychological threshold of $3,500.*

Reasons? Political uncertainty in Washington, disputes over the independence of the Fed, and the growing global trend of de-dollarization. Central banks around the world are gradually reducing their dollar reserves and replacing them with gold. Last but not least, Goldman Sachs has also set the expected price at $3,700 by the end of 2025, with $4,000 by mid-2026, which is solid room for growth even at the current valuation. [2]

*        Data relating to the past are not a guarantee of future returns.

[1,2] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. Forward-looking statements involve risk and uncertainty by their nature because they relate to future events and circumstances that cannot be foreseen, and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.

Warning! This marketing material is not and should not be construed as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency can affect returns due to fluctuations. All securities trades can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s., regulated by the National Bank of Slovakia.

Resources:

https://www.cnbc.com/2025/05/09/60-40-portfolio-is-dead-better-way-to-invest-for-retirement.html

https://finance.yahoo.com/news/bonds-havent-protecting-investors-stock-033829192.html