Timeline for Should I fund retirement with a static asset allocation or an age based glide path?
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| Sep 2, 2011 at 7:29 | comment | added | littleadv | @jldugger - it is true that your wealth should grow with age, but it is not true that it has to grow lineary. Investments made when you're young have much more growth potential than the investments made when you're old. Why limit this potential? Proportionally, your younger self has hardly anything to be investing with. - yes, but the little contribution you've made at the age of 20 can become worth of 20 contributions you made at the age of 60 when you reach that age. If you lose it, however - you only lost one little contribution. | |
| Sep 2, 2011 at 0:58 | comment | added | jldugger | The point is that your wealth should grow with age, since you have make contributions over time. Proportionally, your younger self has hardly anything to be investing with. | |
| Sep 1, 2011 at 22:47 | comment | added | littleadv | @jidugger - but you're allocating your investments when you're making them, and then you know what your age is. It doesn't matter how wealthy you are, because you're dealing with proportions anyway. I fail to see the point in your comment. | |
| Sep 1, 2011 at 22:14 | comment | added | jldugger | "Just look at the graphs..." Well, young people aren't as wealthy. If you were to graph portfolio allocation between stocks and bonds over time, and measure the "stocks" and "bonds" areas as dollar-years, the bulk of that exposure is late in life. This observation is borrowed from a book of academic Robert Shiller, but I don't think it came with empirical analysis, just a hypothesis. I was really hoping to find a widely cited paper on the value of lifecycle investing.... | |
| Sep 1, 2011 at 21:51 | history | answered | littleadv | CC BY-SA 3.0 |