Bonds Now Make Up Just 8% of the Average Portfolio. What Replaced Them?

The average investment portfolio now holds only 8% in bonds, according to Charles Schwab's 2025 Modern Wealth Survey. This sharp decline marks a radical shift from the traditional 60/40 model (60% stocks, 40% bonds) that has been the default retirement allocation for decades.

Survey Details

The survey found that 42% of Americans believe the 60/40 model is outdated. Skepticism is even higher among younger generations: 46% of Gen Z (born 1997-2012) and 46% of Millennials (born 1981-1996) agree the model no longer works.

What Replaced Bonds?

While the survey did not specify a single replacement, the trend points to increased diversification across other asset classes such as:

• Global equities
• Exchange-traded funds (ETFs)
• Cryptocurrencies
• Alternative investments (e.g., real estate, commodities)

Context

This shift reflects changing expectations for returns and risk. With historically low interest rates (until recently) and high inflation, bonds have become less attractive as a hedge and income source. Younger investors favor higher-growth assets despite their volatility.

What It Means for Investors

Investors need to reassess their asset allocation to align with their goals and risk tolerance. The 60/40 model may not suit everyone, but abandoning bonds entirely could increase portfolio volatility. Consulting a financial advisor is recommended to determine the optimal allocation.