Is being a conservative investor worth it? For the past decade, the answer has been no. An investor with a high allocation to equities versus bonds (say an 80/20 split) in what is often referred to as a growth portfolio would today be almost 20 per cent richer than an investor in a balanced portfolio with a 60/40 allocation.Receiving a higher return from taking on higher risk is to be expected. What is surprising is that the growth portfolio investor would not have seen more severe outcomes than the balanced portfolio investor during the decade’s biggest risk-off events: the pandemic of 2020 and the inflation surge it triggered two years later.Subscribe to gift this articleGift 5 articles to anyone you choose each month when you subscribe.Subscribe nowAlready a subscriber? Fetching latest articles
Diversification is the only free lunch for your portfolio
Conservative investing might have appeared dead during the past decade, but history warns that doubling down on growth could be a costly mistake.
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