60/40: Down, Not Out

Talking Real Money - Investing Talk

Don McDonald

Investing, Education, Business, How To

4.5 • 810 Ratings

🗓️ 23 July 2025

⏱️ 41 minutes

🔗️ Recording | iTunes | RSS

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Summary

Don and Tom defend the long-maligned 60/40 portfolio, diving into a 150-year Morningstar study that reveals its lower volatility and emotional survivability—even if it underperforms an all-stock portfolio over time. They tackle fixed indexed annuities head-on, debunking the myth of market returns without risk, citing high commissions, surrender charges, lack of liquidity, and poor transparency. Several listener calls highlight confusion over annuity strategies and Roth vs. pre-tax retirement contributions, including a deep dive from a New York City teacher juggling pensions, 403(b)/457 plans, and Roth conversions under new IRS rules. The show wraps with a playful rant about birthday freebies and a PBS show rec (“Mr. Bates vs. the Post Office”). 0:04 The truth about balanced portfolios and the 60/40 myth 1:50 Why bonds failed in 2022—and what 150 years of history say about diversification 3:27 Bear markets: 60/40 vs. all stocks during crises like the Great Depression 4:53 Trade-offs: long-term growth vs. sticking with the plan 6:49 Financial Flinch Reflex: the PSA ad returns 7:09 Caller John asks: “What’s so bad about fixed indexed annuities?” 8:00 Don unloads: high fees, misleading returns, and awful disclosures 10:11 John presses for alternatives: what’s safe and simple with decent return? 13:02 Don’s CD ladder strategy vs. annuities 15:08 Why opacity, commissions, and complexity make these products unsuitable for most 16:21 Caller Charles: a planner wants to manage his annuity—for a fee 17:21 Why even “fixed” annuities might not belong in fiduciary portfolios 20:47 The growing gray area: commissions vs. fiduciary care 22:17 Ranking annuities: worst to best (indexed, variable, fixed, immediate) 24:58 Summary: “Lazy products” sold for commission, not client success 26:39 Caller Brian: NY teacher strategizes 403(b), 457, Roth, and future pension 28:29 Navigating new Roth rules, Rule of 55, and using a 7% fixed option 30:15 Don and Tom: stick with pre-tax now, convert later in lower-bracket retirement 33:02 Mechanics of Roth catch-ups: plan providers still in the dark 35:29 Birthday freebies! Tacos, cookies, burgers… and existential dread 36:57 Red Robin, Denny’s, and the pursuit of the free Grand Slam 38:06 Book chat: Don’s still slogging through the Franklin bio 39:13 Must-watch: Mr. Bates vs. the Post Office on PBS Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Race the rudder, raise the sails, raise the sales!
0:05.0	Captain, an unidentified ship approaching. Over.
0:07.0	Roger that. Wait, is that an enterprise sales solution?
0:13.0	Reach sales professionals, not professional sailors.
0:17.0	With LinkedIn ads, you can target the right people by industry, job title, and more.
0:21.4	To get £100 off your first campaign, go to LinkedIn.com slash lead to claim your credit.
0:26.6	That's LinkedIn.com slash lead. Terms and conditions apply.
0:35.0	Reality Radio for a really great future.
0:38.0	We're talking real money.
0:40.0	All right.
0:40.4	Let's get the housekeeping stuff out of the way right now.
0:42.9	Let's do it.
0:43.9	Let's give the phone number out because that's the key to getting your questions about money answered by two old guys who've done this for a long time and are going to give you
0:56.4	answers that you may not like, but you can probably figure of the truth, at least the truth
1:03.8	as far as we know. And that number is 855-935-8255.
1:11.2	Now, in case you just joined us, the show's talking real money.
1:14.6	And the two old guys go by the name of Tomcock over there in the Washington studio and Don McDonald here in Florida.
1:22.2	We've both been doing like radio shows and podcasts and in Tom's case even tv shows about money for like oh several
1:31.0	decades so we kind of know what we're talking about and we love talking to you 855
1:36.9	935 talk 855 935 855 935 85 85 95 85 85 85 35 85 85 35 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 85 the concept of a balanced portfolio of having some money in
1:48.5	stocks, some money in bonds, probably a little more in stocks than in bonds because they tend to
1:51.9	make more money. But the main reason we do it is because of its diversification effect.
	...

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