When markets are on the rise, it’s easy to wonder: Why not go all in on stocks? Why hold bonds or anything that might drag down performance?

It’s a fair question, especially when headlines focus on record highs and tech-fueled growth. But, let's take a look at a different view. One that’s informed not just by short-term performance, but by long-term planning, especially for clients who are already drawing income from their portfolios or preparing to do so soon.

If you’re in your income-generating years, protecting your nest egg isn’t about chasing every market gain. It’s about ensuring that your portfolio is reliable, resilient, and structured to support withdrawals, even in volatile market conditions.

That’s why we lean on a well-balanced, diversified portfolio and use fixed income as a key tool to help manage risk. The strategy isn’t new. In fact, it’s been tested over the past 150 years. And history has a lot to say about why it still works.

What is a 60/40 Portfolio and Why Does it Matter?

You’ve likely heard of the “60/40 portfolio,” a well known strategy that allocates 60% of assets to equities (stocks) and 40% to fixed income (bonds or bond-like investments).

The idea is simple:

• Stocks can help provide long-term growth and combat inflation.

• Bonds can help manage the overall volatility of the portfolio and provide income.

It’s not designed to hit home runs. It’s designed to help weather storms. And if you’re in a phase of life where you’re taking withdrawals from your portfolio, that potential for lesser volatility becomes incredibly important.

Why You Don't Want to Max Out on Market Exposure

When you’re younger and in your wealth accumulation years, your goal is usually growth, and the market is the main engine. But when you shift into income generation—whether that’s retirement or transitioning to relying on your investments—the game changes.

Here’s why we don’t load portfolios with all stocks:

1. Withdrawal Risk (a.k.a. Sequence of Returns Risk)

If the market drops early in your retirement or during a time when you need to take withdrawals, those losses are harder to recover from. You're selling investments when prices are low, locking in losses, and depleting your future potential growth.

Fixed income can potentially help address this risk with less fluctuation and giving us a more reliable source of funds to draw from during downturns, so we don’t have to sell stocks at a loss.

2. Confidence

Many clients don't want their retirement income plan swinging 20% or 30% with market fluctuations. The right mix of equities and bonds can help manage volatility so you can stay the course with confidence.

3. More Predictable Income

Many fixed income investments pay regular interest, which can help meet your spending needs without relying solely on stock performance.

So while we still invest in equities, we’re intentional about not overloading portfolios with them, especially when you're depending on that portfolio to support your lifestyle.

What 150 Years of Market Data Shows Us

To really understand the value of this approach, let’s take a step back and look at how markets and the 60/40 portfolio have behaved over time.

 Per Morningstar, 1871, there have been:

• 19 bear markets in stocks (declines of 20% or more)

• 3 bear markets in bonds

• 11 bear markets for the 60/40 portfolio

Despite all that, a dollar invested in a 60/40 portfolio in 1871 would have grown (after inflation) to over $4,000 by June 2025. A dollar in stocks alone? Over $31,000. For purposes of this hypothetical example, US Large Cap stocks, such as the S&P 500, were used to represent the 60% portion of the portfolio and an equivalent of the 10-year government-bond yield was used for the other 40% of the portfolio.

But that’s not the whole story.

The stock market often fell harder and took longer to recover than the 60/40 portfolio. And when you’re withdrawing income, those details matter a lot more than headline growth numbers.

A Few Key Market Crashes And What They Taught Us

The Great Depression (1929–1932)

• Stocks dropped 79%

• 60/40 dropped 52.6%

Still a painful loss, but nearly 30% less severe. That difference matters when you're drawing income.

The Lost Decade (2000–2013)

This period includes both the dot-com crash and the Great Financial Crisis.

• Stocks dropped 54%

• 60/40 dropped 24.7%

The 60/40 portfolio was down less than half as much and recovered faster. For retirees or near-retirees, that means fewer disruptions to their income plan.

COVID and the Bond Market Crash (2020–2025)

This is the most recent, and most unusual, period in history.

Both stocks and bonds dropped significantly. For the first time in 150 years, the 60/40 portfolio took longer to recover than an all-equity portfolio. But even then, it didn’t fall as far as either market on its own.

That’s key. Even in this worst-case scenario, diversification can help manage volatility.

Bonds Don't Just Help Manage Risk They Support Withdrawals

Let’s be honest: bonds aren’t necessarily exciting. They don’t generate headlines. But for clients who are taking income, they’re essential.

Here’s how we use them in your portfolio:

Help Manage Against Equity Volatility

When stocks fall, high-quality bonds typically rise, or at least hold steady. That can help give us breathing room during downturns.

A Potential Source of Reliable Income

Many fixed-income investments pay consistent interest. These can be used to help meet spending needs without touching principal.

Liquidity for Withdrawals

If the market drops, we don’t want to sell your equity holdings while they’re down. Bonds potentially give us an alternative. We can pull income from more conservative sources, allowing your equities time to recover.

This strategy can potentially help reduce what we call “reverse dollar-cost averaging,” which happens when you’re forced to sell more shares during a downturn just to generate the same amount of cash. That’s a scenario we work hard to avoid.

What About Now? Markets Are Up, Shouldn't We be More Aggressive?

It's true that markets have come back strongly since their lows. And it’s natural to wonder if we should lean in more.

But here’s the thing: when you’re drawing income, risk management becomes more important than return chasing.

Yes, stocks are up, but they’ll come down again. We don't know when. What we do know is that your plan needs to be able to withstand the next downturn. And that means not getting overexposed when times are good.

We’re not trying to win the short-term race. We’re trying to help you cross the long-term finish line calmly, confidently, and without taking on unnecessary risk.

Why We Don't Stick Rigidly To "60/40"

The 60/40 portfolio is a useful reference point, but we don’t apply it blindly.

At EmVision, we tailor every portfolio based on your needs:

• How much income you need and when

• Your tolerance for risk and volatility

• Your legacy goals or timeline

• Your overall financial picture

Some clients may need a more conservative allocation (say, 40/60). Others may be fine with 70/30. It’s not all about the ratio, it’s more about the strategy behind it.

The Big Picture And What This Means For You

If you’re in your income-generating years, retired or planning to retire soon, your financial life depends more on reliability than outperformance.

And that’s what this balanced approach strives to deliver:

• A smoother ride
• Fewer sharp drops
• More predictability
• Income flexibility during volatile times

We diversify with the goal of giving your plan the best shot at lasting as long as you need it to.

Final Thoughts

Markets will always go through cycles. Some up, some down. Over time, we believe in their ability to grow, but we also know downturns are inevitable.

Fixed income helps us prepare for those times. It can help address withdrawal risk and provide less volatility. And most importantly, it can potentially allow you to stay invested so your long-term plan stays on track.

At EmVision, we’re not trying to beat the market. We’re helping you build a life where your money works for you, no matter what the market is doing.

Let's Talk About Your Income Strategy

Are you drawing from your portfolio now? Thinking about retirement in the next few years? Wondering if your current investment mix is right for this next phase? Let's chat.

Contact us today. We can walk through your goals, review your portfolio, and help you create an income strategy that’s built to help weather whatever comes next.

Johnathon Opet, CFP® is a financial advisor located at EmVision Capital Advisors, 251 W. Garfield Rd. ​Suite 155 Aurora, OH 44202. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (330) 954-3770 or at info@emvisioncapital.com.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

Hypothetical examples presented in this material are for illustrative purposes only. No specific investments were used in this scenario, and actual results may vary.

All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance is not indicative of future results.

Bonds are subject to availability and market conditions; some have call features that may affect income. Bond prices and yields are inversely related: when the price goes up, the yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity.