[Majromax]

> Wouldn’t the most risk-efficient strategy both depend on a large number of factors and also, in any case, start off with a higher allocation of equities and move over time to a higher allocation of bonds?

Not really. The most risk-efficient strategy optimizes the ratio between expected return (less the risk-free rate) and volatility (standard deviation), regardless of the absolute value of those parameters.

If that optimal allocation has too much risk, such as for the near-retiree, then the investor can keep a fraction of their portfolio in the mix and the other half in cash (money market, paying the risk-free rate). If the allocation has too little risk, then the inverse applies: borrow on margin (at approximately the risk-free rate) to invest more than 100% of net assets into the mix.

[mattmaroon]

Right but a 25 yr old’s retirement account has practically zero risk. If you functionally can’t withdraw the money for decades anyway, there’s approximately zero chance a dollar invested in bonds will outperform a dollar invested in equities.

Ending up at 60/40 might be a good plan, but starting there seems a waste of money.