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As a conservative investor, I generally maintain a 50/50 ratio of equities and bonds in my portfolio. I have recently increased the percentage of equities in my portfolio.

Because I am well past 73 and still have some traditional (non-Roth) IRAs in my portfolio, I do have to take annual required minimum distributions (RMDs).

When I take RMDs in 2026, I have taken withdrawals primarily from the bond and target funds portion of my portfolio. When I do this, the result is that I increase the proportion of equities in my portfolio, and reduce the percentage of bonds.

Because of the current high inflation in the U.S., which is unlikely to change very much in the near future, I think it makes sense to increase the percentage of equities (common stock) in my portfolio. When long-term interest rates increase, which they have recently, the value of long-term bonds in your portfolio falls in price.

Until inflation rates decrease — and I doubt they will fall dramatically anytime soon — I think it makes sense to increase the percentage of equities in your portfolio and reduce the percentage of long-term bonds. That’s what I have been doing.

As I have said many times in my column, I invest the equity portion in my portfolio mainly in diversified index funds (an example is an S&P index fund). That has worked for me on a long-term basis, and I don’t expect to change my investment philosophy.

Over the last year, my portfolio has increased over 15%. The bond portion of my portfolio, which was almost 50% of the portfolio, has increased slightly more than 8% over the last 12 months.

In previous columns, I have recommended the Vanguard Dividend Appreciation Index Fund, VDADX, which invests in companies that pay high dividends and have a history of increasing them. I have invested in this fund for more than 15 years. The return over the last year was an increase of 21.6%.

I always reinvest dividends from this fund and avoid making any withdrawals as part of my required RMDs. Vanguard has indicated that over the last 10 years, the fund has had an annual average increase of 13.19%. Morningstar consistently gives the fund an excellent rating.

For many years I have only invested in U.S.-based equities, because their returns on average have been higher than those for overseas equities. However, this situation has been reversed. As a result, I have become more diversified and now invest approximately 10% in overseas equity funds that have had better returns.

Many investment advisers have recently recommended that investors consider investing 90% of their portfolios in equities and the remaining 10% in bonds or money-market funds. I think this is an extreme position, and I would not recommend this allocation except for investors who are many years from retirement.

I have always recommended that investors maintain a small percentage of their portfolios in safe investments, such as money-market funds, that are immediately liquid but that also pay reasonable returns.

For example, I also maintain some funds (less than 3%) in a Vanguard money market fund that currently earns 3.61%, that are immediately liquid — even more so than one-year CDs, which currently pay approximately 4%.

Bottom line: As long as inflation rates remain high — and, in the short run, I think that will be the case — you may want to consider increasing the percentage of your portfolio in equities, as opposed to long-term bonds.

The federal reserve is unlikely to reduce interest rates in the short term. If they decide to increase interest rates, rather than decrease them, equities should continue to do better than bonds.

Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.

© 2026 Elliot Raphaelson. Distributed