Investing - Theory, News & General • Re: 80% stocks and 20% cash is equivalent to what?

There’s also this: https://awealthofcommonsense.com/2015/0 ... portfolio/

(It would be interesting to see this updated given the early 2020’s bond mess.)

The appeal to me of the 75/25 is that during a period when both stocks and bonds are getting hit, cash provides a stable pot of money that is minimally affected by the markets.

So even though the overall portfolio is more volatile (versus 60/40), the cash allocation has less volatility than an equivalent bond allocation.

And if you have the classic 25X Portfolio, that means you’ve have 5 years of expenses to carry you through bad times.

But why is it better (this is a question) to have a more volatile *portfolio* so that one *piece* of the portfolio is less volatile? I don't see why that is a win.

You are right, it’s most definitely not a win. Cash provides lower returns than bonds, and given that cash has no volatility, it also provides zero diversification benefits.

I’ll take the higher returning / more diversified portfolio any day.

Statistics: Posted by absolute zero — Tue Oct 13, 2026 6:35 pm