The Surprising Truth: Stocks Outperform Bonds in Retirement Portfolios

New research challenges the traditional balanced portfolio strategy of diversifying between stocks and bonds for retirement savings. The study suggests that an all-equity strategy, with a mix of domestic and international stocks, can outperform age-based stock-bond strategies in terms of building wealth, supporting retirement consumption, preserving capital, and generating bequests. The researchers argue that the potential economic gains from a stocks-only strategy outweigh the short-term poor performance and recommend considering all-equity strategies as viable alternatives for investors and pension regulators.