The 60/40 portfolio—60% stocks, 40% bonds—used to be the answer to everything. Your financial advisor recommended it. Your parents probably had one. It worked for decades because it was simple: stocks grew your money, bonds protected it when things got rough.
But if you're sitting on $5 million or more, that playbook is outdated.
Not slightly outdated. Completely outdated.
When you're managing serious wealth, you're dealing with different problems. You're thinking about taxes, about passing money to the next generation, about what happens if inflation stays high or markets go sideways for years. The 60/40 split wasn't built for any of that.
The wealthy figured this out years ago. Walk into any family office today and you'll see portfolios that look nothing like the textbook model. More real estate, more private companies, way fewer bonds, and a whole bunch of stuff most people have never heard of.
Let's talk about what actually works now.
What Happened to 60/40?
The whole idea came from a guy named Harry Markowitz back in the 1950s. His theory was straightforward: if you mix assets that don't move together, you get smoother returns. Stocks go up, bonds stay steady. Stocks crash, bonds hold the line or even rally.
It worked great. Until it didn't.
In 2022, both stocks and bonds got hammered at the same time. Investors who thought they were protected suddenly realised they'd been caught flat-footed. The diversification that was supposed to save them just... wasn't there.
Here's what changed:
Stocks and bonds started moving together during bad times, which defeats the entire purpose. Bond yields are mediocre at best, especially after you factor in inflation. And when everything's uncertain—geopolitics, interest rates, whatever—bonds don't cushion the blow like they used to.
If you've got $100 million, you can't afford to wait around hoping the old playbook starts working again. You need something better.
What Wealthy People Actually Own
I've seen the research from UBS, Citi Private Bank, BNY Mellon—all the places that work with ultra-high-net-worth families. Their portfolios look completely different now.
Here's roughly what you'll see:
- 45–50% in stocks (still the biggest piece, but not dominant)
- 15–20% in real estate
- 15–25% in private equity or businesses they own outright
- 10–20% in alternatives like hedge funds and private lending
- 5–10% in bonds (yes, that small)
- 5–15% in cash
Bonds went from being nearly half the portfolio to barely 10%. That's not a tweak. That's a total overhaul.
Why Bonds Got Demoted
Bonds used to be the "safe" part of your portfolio. Now? They're just dead weight for most wealthy investors.
Think about it. You're getting maybe 4–5% yield on a 10-year Treasury. After taxes and inflation, you're barely keeping up. And if rates spike or the economy stumbles, you could lose principal, too. There's no upside and limited protection.
So where's the money going instead?
Private credit funds that pay 7–12% or more. Real assets that throw off income and appreciate with inflation. Dividend stocks that give you growth and cash flow.
The only reason wealthy investors keep any bonds at all is for liquidity—having some cash on hand for opportunities or emergencies. It's not a strategic bet anymore.
Real Estate Became a Core Holding
This one makes sense when you think about it. Real estate generates income, usually keeps pace with inflation, comes with tax breaks, and you can actually touch it. It's real.
We're not talking about vacation homes (though sure, those too). We're talking about apartment buildings, warehouses, data centres, and farmland—assets that produce cash flow and appreciate over time.
Wealthy investors are putting 15–20% of their portfolios here, and honestly, some are going even higher. When your timeline is measured in generations, owning physical assets that people will always need starts to look pretty smart.
Private Equity Is Where Wealth Actually Multiplies
Here's the thing nobody wants to say out loud: almost every truly wealthy person got there by owning a business, not by buying index funds.
So it makes perfect sense that once they have liquid wealth, they keep doing the same thing—buying stakes in private companies, investing in startups, co-investing alongside private equity funds.
These investments can return 15%, 20%, and sometimes 30% annually over time. More importantly, they give you control and involvement. You're not just hoping the market goes up. You're actively building something or backing founders who are.
Some family offices put more than half their money into private businesses. Compare that to the 5% they might keep in bonds. It tells you everything about where they see the real opportunity.
The Rise of "Alternatives"
This is where portfolios start looking alien if you're used to traditional investing.
Alternatives is just a catchall term for stuff that isn't stocks or bonds. Private credit that pays double-digit yields. Hedge funds that try to make money whether markets go up or down. Infrastructure investments. Royalties. You name it.
Here's a rough guide:
Private equity: 15–25% returns if you pick well, but your money's locked up for years
Venture capital: Swing for the fences at 20–30%+ returns, knowing most bets fail
Private credit: 7–12% yield, basically replacing what bonds used to do
Hedge funds: 6–10% with less volatility than stocks
Real assets: 6–9%+ from things like infrastructure or commodities
UBS found that 54% of family office money in the U.S. is now in alternatives. More than half. These aren't fringe strategies anymore—they're the mainstream for wealthy investors.
How to Think About Your Own Allocation
There's no magic formula. A 35-year-old tech entrepreneur who just sold their company should invest differently than a 65-year-old who wants a stable income and plans to give most of their wealth to charity.
But here are the questions worth asking:
How much do you need to access quickly? If you need $10 million next year for a real estate deal or to fund a new business, you can't have everything locked up in private equity. Keep enough liquid.
What are you actually trying to do? Grow wealth aggressively? Preserve what you have? Generate income? Your answer changes everything about how you should allocate.
What do you know well? If you spent 20 years in real estate, it might make sense to overweight property. If you understand SaaS businesses, private equity in that sector makes sense. Don't invest in things just because other rich people do.
A simple framework: keep 60–70% in core, liquid holdings (stocks, REITs, liquid funds). Use the other 30–40% for opportunistic bets—private deals, venture investments, whatever looks compelling.
Three Ways This Can Go Wrong
Even smart, wealthy people screw this up. Here's how:
Putting all your eggs in one basket private markets. Just because something's exclusive doesn't mean it's good. The Archegos blowup should have taught everyone that. You still need diversification, just in smarter ways.
Paying too much in fees. When you're in multiple private equity funds, each charging 2% management fees plus 20% of profits, and maybe you're in a fund-of-funds that adds another layer... those fees compound. Fast. Make sure you're getting value for what you're paying.
Fake diversification. Having 50 different investments doesn't help if they all go down for the same reason. If everything in your portfolio is sensitive to interest rates or the tech sector, you're not actually diversified.
A Real-World Example
Let's say you've got $50 million to invest. Here's what a modern allocation might look like:
- 25% in public stocks - a mix of U.S., international, maybe some direct positions in companies you know
- 20% in private equity - some funds, perhaps a co-investment or two
- 17% in real estate - income-producing properties, maybe a development deal
- 10% in hedge funds - different strategies to smooth out returns
- 8% in private credit - lending deals that pay 8–12%
- 7% in bonds - mostly for liquidity
- 13% in cash - always keep dry powder for opportunities
This isn't prescriptive. Your version might look totally different. You may not understand hedge funds and love real estate, so you go 30% property and 0% hedgies. That's fine. The point is that it looks nothing like 60% stocks, 40% bonds.
What This Really Means
The 60/40 portfolio was perfect for its time. But its time is over.
If you're managing significant wealth today, you need access to opportunities most investors never see. You need to think about taxes, liquidity, control, and timelines that stretch across generations.
The wealthiest investors aren't following the old playbook. They're buying businesses, lending money privately, owning real assets, and building portfolios that work for their specific situations.
That's the new standard. Not because it's trendy, but because it actually works in the world we live in now.
