Navigating 2025 Market Uncertainty: The Classic 60/40 Portfolio Approach

Happy 2025 All. As 2025 unfolds, many analysts are anticipating a potential market downturn fueled by high interest rates, slowing global growth, and persistent geopolitical tensions. Adding to the uncertainty, the U.S. presidential election, with Donald Trump emerging as the next US President, is injecting a layer of volatility into markets. 

As part of a defensive strategy, many have suggested to using alternative investment instruments and diversified models like the All-Weather Portfolio to mitigate risks from market volatility. While these approaches offer innovative solutions, in this article, I aim to demonstrate—using data-driven insights—why the classic 60/40 equities and bonds allocation continues to be a reliable and effective strategy.

Can Your Portfolio Survive the Lost Decade? Mine Did (With Backtesting)!

In my previous post, I discussed using a 5.5% return to sustain a consistent drawdown for retirement expenses, primarily through investments in index funds or ETFs. In this post, I’ll dive into how I’m currently implementing this strategy as I prepare for my future retirement.

Since this is my retirement fund, ensuring its resilience during economic downturns is critical. For instance, it’s essential that the portfolio remains sustainable even during harsh periods like the "Lost Decade", a time when the return of the S&P 500 was Negative. To address this, I will be backtesting my portfolio against this worst-case scenario in market history. This helps me evaluate its performance during extended periods of low or negative returns, ensuring that my strategy is robust enough to withstand such challenges. I’ll also explain why this portfolio is particularly suitable for my retirement goals.

Do You Need $3M to Retire? Breaking Down the Numbers

In my previous blog post, I discussed key findings about retirement from the OCBC Financial Wellness Index 2024 report. These findings were also highlighted in local papers, where it was mentioned that retirees would need an estimated $1.5 million to $3 million to sustain monthly expenses of $6,000 to $12,000.

This is quite disheartening because based on the report below, Singapore has approximately 350,000 millionaires, which means over 90% of the population may fall short of this threshold. This raises a sobering question: Are the majority of Singaporeans destined to work indefinitely to sustain their retirement lifestyles?