Outgrowing the 60/40: A New Standard
The traditional 60/40 portfolio (60% stocks and 40% bonds) was once the golden standard for investing. Historically, this structure relied on a negative correlation between stocks and bonds to manage volatility. However, in today’s high-inflation, high-rate environment, both asset classes often move together, undermining diversification benefits.
In his 2025 annual letter to investors, Larry Fink, CEO of BlackRock, advocated for a 50/30/20 model (50% stocks, 30% bonds, and 20% private assets).[2] This shift reflects a broader recognition that private markets offer essential diversification, alpha generation, and inflation resilience.
The Power of Private Markets for Retirement Resilience
Private markets, including private equity, private credit, real estate, and infrastructure, are increasingly critical components of modern retirement portfolios. In an environment where traditional public assets face persistent headwinds, private markets provide differentiated sources of return, lower correlation to listed assets, and enhanced downside protection during crises.[3]
Private Equity: By investing in privately held companies, investors capture growth potential not available in the public markets and benefit from the "illiquidity premium", which is the additional compensation for investing in assets that are not easily tradable in the short term.
Private Credit: These investments involve lending to private companies and are structured to deliver regular income streams, often secured by the borrower's assets.
Infrastructure Investments: Assets like roads, airports, and renewable energy facilities provide stable and predictable cash flows, offering inflation-hedged income streams.
At The Family Office, we recognize that private market investments require careful selection and rigorous due diligence. Rather than focusing purely on headline returns, we prioritize global diversification, risk mitigation, and access to top tier opportunities across private equity, private credit, real estate, and infrastructure. Our investment approach aims to enhance portfolio resilience, achieve steady income, and deliver sustainable long-term outcomes for investors navigating uncertain markets.
The Power of Early Private Market Investing
When it comes to retirement planning, time is the greatest asset investors have. Early investment in private markets amplifies the power of compounding, offering the potential to transform moderate starting sums into substantial retirement assets. Unlike cash savings, which simply preserve nominal value, high-quality private investments provide access to differentiated growth opportunities. Starting early maximizes the potential benefits of the illiquidity premium, strengthening the foundation for long-term financial security.
Scenario Analysis: The Impact of Early Private Market Investing
When considering retirement planning, it is essential to account for both growth potential and the erosion of purchasing power over time. Inflation and rising costs gradually reduce the real value of money, meaning that $500,000 today will not have the same purchasing power in 10, 20, or 25 years.
The following illustrative scenario showcases the compounding impact of early investment in private markets:
(Calculated using the compound interest formula A = P(1 + r)^t with r = 10%)
While $500,000 held in cash would preserve its nominal value, its real purchasing power would steadily decline in an inflationary environment. By contrast, early private market investing can help mitigate inflation’s impact, unlock long-term growth potential, and enhance future purchasing power.
Use The Family Office Retirement Calculator to estimate your projected retirement income, simulate scenarios, and take the first step toward a more secure financial future.
Plan Your Future Today
Building a resilient retirement portfolio requires foresight, discipline, and the right strategic partners. At The Family Office, we empower investors with tailored private market solutions designed for today's volatile environment.
Our team is ready to help you design a portfolio that meets your long-term retirement goals and adapts to an ever-changing market. Schedule a call now.