60/40 vs. 70/30 Asset Allocation: Which Is Better for You?

When comparing 60/40 vs. 70/30 asset allocation strategies, investors often weigh the trade-offs between stability and growth potential. The classic 60/40 split—60% stocks and 40% bonds—has long served as a benchmark for balanced portfolios, offering moderate risk exposure. A 70/30 approach tilts more heavily toward equities, aiming for higher returns while accepting greater volatility. Deciding which mix works best depends on factors like your time horizon, comfort with market swings and financial objectives.

A financial advisor can build an asset allocation that aligns with your risk tolerance, timeline and goals. Find an advisor today.

What Is Asset Allocation?

On the surface, asset allocation seems simple. It’s the strategic mix of different asset classes in an investment portfolio. But asset allocation is an incredibly important part of creating a diversified portfolio. Three primary asset classes typically make up a portfolio’s asset allocation: stocks (equities), bonds (fixed income) and cash.

Stocks

Stocks are small ownership stakes in companies. You can buy stock in many of the biggest companies in the world, like Apple, Microsoft and General Motors. You can also buy stock in smaller companies that have chosen to go public. Stock prices fluctuate throughout the day. When investing in stocks, the general idea is to sell the stock for a higher price than you bought it, creating a return on investment. While capable of producing capital appreciation, stocks are also a volatile asset so the proportion of stocks that you have depends on your risk profile.

Bonds

Bonds are a certificate of debt from companies, governments and municipalities. Bonds pay investors back their principal plus interest at a certain point, known as the maturity date. They generally have less upside than stocks, but are also less risky and offer a stream of income.

Cash

Cash is just that: cold, hard cash that you can access at any time, without taking additional financial steps. It experiences no capital appreciation and offers virtually no income. It can be stored in a traditional savings account or in a money market account.

60/40 vs. 70/30 Asset Allocation

When considering the best asset allocation for your financial situation, you will have to take into account different factors, including current interest rates, inflation and your specific risk tolerance.

For reference, the S&P 500—which comprises 500 large American companies—grew by an average of 10.53% per year between its inception in 1957 through the end of 2024. The iShares 20+ Year Treasury Bond ETF, which tracks the performance of U.S. Treasury bonds with maturities of 20 or more years, has averaged 3.87% since its launch in July 2002.

While historical returns indicate that your portfolio could grow more over time with equities, market volatility will also expose your investments to added risks that can be mitigated by bond.

Let’s take a closer look at the 60/40 and 70/30 asset allocation strategies:

60/40 Portfolio

The 60/40 portfolio refers to an asset allocation of 60% equities and 40% bonds. This classic strategy prioritizes stability, using bonds to cushion against stock market volatility while still capturing equity-driven growth. Historically, this mix has been a go-to for investors seeking moderate returns with reduced downside risk. The bond portion generates steady income, which can help offset losses during market downturns.

Financial experts say this asset mix offers a relatively safe way to grow your assets. As a result, it’s often recommended for those nearing retirement or with a lower risk tolerance who want to preserve capital without sacrificing growth.

70/30 Portfolio

A 70/30 portfolio shifts the balance toward stocks, allocating 70% to equities and 30% to bonds. This approach leans into the higher growth potential of stocks, aiming for greater long-term returns. However, the reduced bond allocation means less protection during market corrections, making it riskier than the 60/40 split.

This strategy may suit investors with longer time horizons or higher risk tolerances, as the heavier stock weighting requires patience to ride out volatility. While bonds still provide some income and diversification, the focus here is on maximizing growth for those comfortable with short-term fluctuations.

As an individual investor, you’ll need to weigh the risks and rewards for your unique financial goals.

When to Choose a 60/40 Asset Allocation

SmartAsset: 60/40 vs. 70/30 Asset Allocation:

Investors with a moderate risk tolerance or short investment horizon could benefit most from a 60/40 asset allocation.

This allocation suits those with moderate risk tolerance, particularly individuals within five to 10 years of retirement who want to protect savings while maintaining some growth potential. It’s also fitting for investors uneasy with market swings but still aiming to outpace inflation over time.

Playing it safer with your investment portfolio could make sense if you are close to retirement or already retired and need your assets to pay for fixed and variable costs. Although, some financial experts may recommended a more aggressive asset allocation if you have sources of guaranteed income like a pension or an annuity.

This strategy can also work for those who’ve already accumulated significant wealth. By blending growth-oriented stocks with income-generating bonds, the 60/40 approach delivers a middle ground for investors seeking reliability without abandoning market participation entirely.

When to Choose a 70/30 Asset Allocation

A 70/30 portfolio may suit investors with a slightly higher risk tolerance and a time horizon of 10+ years, as equities drive long-term returns while bonds cushion market dips.

Mid-career professionals can benefit from this strategy. For example, a 45-year-old planning to retire at 65 might prioritize growth but still want protection against volatility. Compared to a 60/40 portfolio, the 70/30 split offers higher equity exposure, potentially boosting returns without excessive risk. This trade-off becomes relevant in low-interest-rate environments where bonds generate weaker yields, making stocks more attractive.

Consider a hypothetical investor deciding between 60/40 vs 70/30 allocations. If they’re comfortable with short-term fluctuations for greater long-term gains—and have emergency savings to handle unexpected expenses—the 70/30 approach could better align with their goals.

Bottom Line

When choosing between a 60/40 and 70/30 asset allocation, you’ll need to decide what percentage of your portfolio will be invested in stocks. This will depend on the time horizon of your portfolio and your risk tolerance. In either case, you’ll be able to adjust your allocation of bonds to minimize risk during periods of market volatility.

Investing Tips for Beginners

If you’re new to investing and not sure how to select investments or manage a portfolio, consider working with an advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Pick an asset profile. SmartAsset’s free asset allocation calculator can assist you in picking a profile to help align your portfolio allocation with your risk tolerance.