Investment Risk & Asset Allocation: The Basics


(Tommy Lowe) #1

Hey everyone :wave: I wrote a few basic bits on risk and age based asset allocation at the weekend, check it out below, and let me know what you think :v:


(Vladislav Kozub) #2

Nice piece and great graphics, especially the alternative investments part, which has a very strong resemblance to this.

Recently read (read: started reading) Graham’s book, and its latest revision says that the concept of 100 less the age is very outdated, and even people over 60 years old should not be deterred from holding the majority of their portfolio in stocks (should there risk tolerance allow to stand bear markets and corrections). After all, you never know if you will live 60, 80 or 100 years, and even at the age of 65 you can have potential 30 years to go, whereby stocks will most likely outperform bonds.

Also, I guess the target of investing should not be to convert everything to low-risk when you are old and spend it all before you die, but rather leave a decent life and leave a chunk for inheritance purposes, which will inevitable lead to the need of higher risk and higher returns after your death anyway.

Personally I cannot see myself having any more than 0% of my portfolio in bonds for now and in the near 40 years.


#3

Largely agree, however having just gone deep into bonds, I would add as piece of nuance: “depends on the bond”