The Gradual Shift from Growth to Protection

Welcome to Financial Fluency - your monthly guide to mastering financial English, learning how money works, and making confident financial choices.

In this issue:

• A Look at the Markets: Performance June 2026

• The Gradual Shift from Growth to Protection

• Quote of the Day: Benjamin Graham

• We value your feedback

• Word of the Day: Glide Path

• Interactive Quiz

• Whenever you are ready, here is how I can help you

A Look at the Markets: Performance June 2026

Vanguard FTSE All-World ETF (Accumulating)

June was quite a volatile month for the Vanguard FTSE All-World index but it finished positive - up around 1.2%.

iShares Core S&P 500 UCITS ETF (Accumulating)

A similar story for the iShares Core S&P 500 ETF which finished slightly better - up around 1.5%.

Vanguard EUR Corporate Bond ETF (Accumulating)

As expected, less volatility for teh Vanguard EUR corporate bond ETF but it still finished up 0.79%

Bitcoin Monthly Performance $BTC ( ▲ 0.95% )  

June was a month to forget for Bitcoin. In fact it was the worst month for many years. Let’s see what the rest of the year brings. Investors in Bitcoin must expect volatility.

The Gradual Shift from Growth to Protection

Why a 60/40 portfolio makes sense for some people

The gradual shift from growth to protection Why a 60/40 portfolio makes sense for some people

For 76 newsletters, I have made the case for equities, for staying invested, for treating cash as a slow, silent loss to inflation and currency debasement.

This month, I want to admit something that sits slightly uncomfortably against that argument. I am now roughly ten years away from my own retirement, and for the first time, I am seriously thinking about deliberately holding more in bonds. Not because I have changed my mind about debasement. My time horizon has simply changed, and that changes the maths.

Let me explain why this is not the contradiction it first appears to be.

The 60/40 Portfolio

There is a well known rule of thumb in investing called the 60/40 portfolio.

The idea is straightforward: 60% of your money in equities for growth, and 40% in bonds for stability, as you move closer to the point where you may need to start drawing on your savings. The equities keep your portfolio growing ahead of inflation. The bonds exist to reduce the damage if markets fall sharply just as you need to start withdrawing money, a problem we have discussed before as sequence-of-returns risk. It is the same principle behind not investing money you need within five years, just triggered by proximity to retirement rather than a fixed date.

The closer you get to needing the money, the less you can afford a repeat of a month like March 2026.

The Glide Path

I have not made this shift yet. I am still, largely, invested the way I have described throughout this newsletter.

What I am starting to think about is a gradual move, sometimes called a glide path, rather than a sudden change. Shifting allocation slowly over ten years, rather than moving a large sum from equities to bonds in a single decision, reduces the risk of getting the timing badly wrong in either direction. It also matches how I have always preferred to invest, through gradual, unemotional decisions rather than one dramatic move. Ten years still feels comfortably far away, which is exactly why now, rather than later, is the sensible time to start thinking about it.

Waiting until five years out to start this conversation would leave far less room to adjust gradually.

Where I Stand

I should be honest that a 60/40 split may seem conservative to someone with my mindset, but it may well be a good starting point, particularly for someone starting to live off their investments.

Most retirement income planning, including the 4% rule we discussed last month, assumes you will gradually sell down your capital each year to fund your income. For this reason, reducing drawdowns becomes more important. A 60/40 portfolio can often do this, but it is not guaranteed, as we saw in 2022.

I am also hoping to supplement my income with dividends, such as those from AstraZeneca, much as my mother did.I should be honest that a rigid 60/40 split may not suit me, or you, precisely as written.

Conclusion

None of this changes my underlying view on the dangers of holding too much in cash over the long term.

It simply means that as retirement gets closer, protecting a portion of your portfolio from a bad year in the markets becomes more important than squeezing out every last percentage point of growth. That is not losing to inflation. That is buying certainty at a point in life where certainty starts to matter more.

Like any glide path, the key is starting the descent early enough for it to feel gradual rather than sudden.

As always, none of this is financial advice. Everyone should invest according to their personal circumstances, risk tolerance and financial goals.

Quote of the Day: Benjamin Graham

This captures exactly the shift I have described above. For most of my investing life, the priority has been growth. As retirement approaches, though still some way off, managing the risk of a badly timed downturn starts to matter just as much as the returns themselves.

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Word of the Day: Glide Path

Glide path - noun phrase - a gradual, planned shift in investment strategy over time, typically moving from higher-risk assets like equities towards lower-risk assets like bonds as an investor approaches a specific goal, such as retirement.

Context and Usage: The term "glide path" originally comes from aviation, describing the gradual, controlled descent of an aircraft towards landing. In finance, it describes a similarly gradual, controlled shift in a portfolio's risk level over a defined period, rather than a sudden change. Target-date pension funds are often built around an automatic glide path, gradually reducing equity exposure as the target retirement date approaches.

Note: A glide path is a plan, not a single event. It typically unfolds over years or even decades, allowing an investor to adjust gradually rather than trying to time a single large decision.

Common Collocations:

Follow a glide path - to implement a gradual, planned shift in allocation Many pension funds follow a glide path, automatically reducing equity exposure as savers approach retirement age.

Glide path strategy - the overall approach of gradual reallocation over time A ten-year glide path strategy allows investors to shift from equities to bonds without needing to time the market perfectly.

Automatic glide path - a preset, scheduled reallocation built into a fund Target-date funds use an automatic glide path, so investors don't need to make manual adjustments each year.

Business Example: The pension provider designed an automatic glide path for its default fund, gradually increasing bond allocation for members as they approached their selected retirement date.

Investment Context: A glide path is particularly relevant for retirement investing, where the consequences of a badly timed market downturn become more serious as the point of withdrawal approaches. Rather than making one large, difficult decision, a glide path spreads the adjustment gradually over years.

Interactive Quiz

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Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.