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For decades, the classic 60/40 portfolio — 60% stocks and 40% bonds — served as the cornerstone of balanced investing. The idea was simple: When stocks stumbled, bonds would steady the ship.
But according to economist Peter Schiff, that old formula no longer holds up. Inflation, he warns, has torn apart one side of the traditional mix, leaving investors exposed to painful consequences.
“Bonds are clearly the biggest victims of inflation. If you own bonds, inflation kills you. There is no hedge,” Schiff said in a YouTube video from October 2025 (1).
But, on Dec. 22, Wells Fargo reported that the yield on 10-year bonds increased 0.03% while 30-year bonds saw a 0.02% uptick (2). This follows the BLS reporting lower inflation rates than expected on Dec. 18, in their first report on the Consumer Price Index since the government shutdown in October and November (3).
Bonds are particularly vulnerable when price levels rise. Their fixed payments don’t adjust for inflation, meaning investors are repaid in dollars that buy less and less over time.
Meanwhile, higher inflation often pushes interest rates up — and as rates rise, the market value of existing bonds falls because new issues offer better yields. That double blow — shrinking purchasing power and falling prices — can leave existing bondholders with real losses even as they collect “safe” interest payments.
That’s a serious concern because bonds remain a core holding in many Americans’ portfolios, especially retirement accounts. For retirees and near-retirees counting on those holdings to preserve purchasing power, inflation can quietly erode wealth — even when markets appear calm. If inflation spikes again, many Americans could see their portfolios become compromised.
To address that problem, a major Wall Street firm is giving the traditional 60/40 mix a modern upgrade.
Schiff pointed out that Morgan Stanley is leading the rethink. Instead of 60% stocks and 40% bonds, Morgan Stanley chief investment officer Mike Wilson now favors 60% stocks, 20% fixed income and 20% gold.
“Gold is now the anti-fragile asset to own, rather than Treasuries. High-quality equities and gold are the best hedges,” Wilson told Reuters (4).
Gold has helped investors preserve wealth for thousands of years. It’s a natural inflation hedge — unlike fiat currencies, it can’t be printed at will by central banks. It’s also considered the ultimate safe haven: not tied to any single country, currency or economy. When markets wobble, or geopolitical tensions flare, investors often rush into gold, driving prices higher.
That trend is already underway. Gold prices are up 136.15% over the last five years, with much of that growth happening in 2025 (5). Schiff noted that Morgan Stanley’s suggested 20% allocation is “not chump change” — calling it “a lot of money coming into gold” (6). He believes it could mark the start of a major shift, as “a huge wave of Wall Street money” flows out of bonds and into gold.
And Morgan Stanley isn’t alone. Goldman Sachs has become increasingly bullish as well, recently raising its December 2026 gold price target by $600 to $4,900 per ounce, expecting strong ETF inflows and continued central bank buying (7). As of Dec. 22, 2025, the spot price of gold hit a new record high of over $4,450 per ounce (8).
Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)’
One method that some people use to invest in gold is a self-directed gold IRA.
A gold IRA allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.
If you’re not sure where to start, you can check out some of Moneywise’s top picks for gold IRAs to compare your options for free. Just keep in mind that gold is often best used as one part of a well-diversified portfolio.
Wilson also highlighted high-quality equities — alongside gold — as “the best hedges” against inflation. Schiff expanded on that point, saying “stocks can also be viewed as an inflation hedge, although not all stocks are the same in that respect.”
Stocks can serve as a hedge against inflation when companies are able to raise prices to offset rising costs, allowing their revenues and earnings to grow alongside inflation.
Over time, that ability to pass on higher costs allows corporate profits — and ideally, share prices — to adjust upward. While not every stock offers protection, businesses with strong pricing power, essential products and healthy balance sheets tend to hold up better when inflation erodes purchasing power.
For investors who don’t want the pressure of correctly picking winners and losers, there’s a simpler way to gain exposure to high-quality companies — one endorsed by legendary investor Warren Buffett.
“In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett has famously stated (9).
This approach gives investors exposure to 500 of America’s largest companies across a wide range of industries, providing instant diversification without the need for constant monitoring or active management.
The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, which automatically invests your spare change.
Signing up for Acorns takes just minutes: Link your cards, and Acorns will round your purchases to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. That $4.25 coffee every morning? It’s now a 75-cent investment in your future.
With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.
Beyond gold and equities, real estate remains one of the most powerful ways investors have sought to protect their wealth from inflation. Besides, Morgan Stanley’s 60/20/20 breakdown could just as easily be applied to alternative assets as a whole — not just gold.
When inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation.
Over the past five years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index has jumped by 45% as of Sept. 2025 (10), reflecting strong demand and limited housing supply.
High home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn’t exactly hands-off work — managing tenants, maintenance and repairs can quickly eat into your time (and returns).
The good news? You don’t need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.
Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.
The process is simple: Browse a curated selection of homes pre-vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and sit back as you start receiving any positive rental income distributions from your investment.
Another option is Homeshares, which gives accredited investors access to the $34.9 trillion U.S. home equity market — a space that’s historically been the exclusive playground of institutional investors.
Homeshares allows accredited investors to gain direct exposure to a portfolio of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the hassles of buying, owning or managing property.
The fund focuses on homes with substantial equity, using Home Equity Agreements (HEAs to let homeowners access liquidity without taking on debt or interest payments. This creates an attractive, low-maintenance investment vehicle for retirement savers, with a minimum investment of $25,000.
With risk-adjusted target returns of 14% to 17%, the U.S. Home Equity Fund offers investors access to America’s largest store of household wealth.
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@peterschiff (1); Wells Fargo Advisors (2); BLS (3); Reuters (4); Forbes (5); @Schiffgold (6); Barrons (7); APMEX (8); CNBC (9); S&P Cotality Case-Shiller U.S. National Home Price NSA Index (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.