Historically, the traditional retirement savings plan largely consisted of a portfolio of stocks and bonds in a ratio of 60/40 or some other combination, and adjusted along the way. A lot of savers have also used real estate and other investments, also risk-based assets, which is why it is so valuable and important to have adequate risk management for long-term planning.
What has also been assumed historically is that bonds were a lower-risk, low-volatility diversification asset. Added to this, for the last 40 years interest rates have been trending down – from around 20% in the 1980s all the way to negative rates in the 2020s. This trend helped reduce overall portfolio volatility.
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