Rich Dad Poor Dad author Robert Kiyosaki has criticised the traditional 60/40 investment formula – where one is advised to invest 60 per cent of the money into stocks (equities) and 40 per cent into bonds (fixed income). The financial planners have considered this a “magic formula” for long-term, balanced, and reliable gains. He added that this ratio became obsolete years back, sometime in the 1970s, when the US dollar stopped being backed by gold.
‘Magic wand of 60/40 is dead’
In a post on X (formerly Twitter), he advised people not to go by this formula and instead choose one that “works best for them”.
“Finally, the ‘magic wand’ of Financial Planners. The 60/40 is dead. FYI: 60/40 meant investors invest 60% in stocks and 40% in bonds,” he wrote.
The author added, “That BS ratio died in 1971, the year Nixon took the dollar off the gold standard. For years, financial planners have touted the 60/40 as if it were the magic carpet ride to financial security in retirement.”
The 78-year-old said that the US government is the biggest debtor in the world, and added that the dollar is “fake” money.
He went on to ask, “How can there be any financial security when the US dollar is fake, an IOU from a bankrupt US Government controlled by the Marxist Fed,” before adding, “the US government is the biggest debtor nation in history.”
“Who would be stupid enough to buy bonds (debt) from a bankrupt country?” he said, suggesting that the government no longer offer safety to the investors.
The 60/20/20 shift
He then gave an example of how investment banking companies like Morgan Stanley favour a 60/20/20 portfolio strategy, which is 20 per cent bond and 20 per cent gold. Kiyosaki added to this and said that it “gives investors a better chance for a more secure retirement”.
Kiyosaki, who has always bet on real assets like gold and silver, has doubled down on it.
“I still prefer gold and silver coins, Bitcoin, Ethereum, and income from rental real estate using debt,” he further said, before adding, “And income from oil wells and cattle, real assets, but I retired financially free over 30 years ago….”
He revealed that he has never used what many call the “financial planner’s magic wand of 60/40”.
“Find the investment formula that works best for you,” he further shared the “real-life lesson” with his followers.
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