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Article Link:Yale University finance professor James Choi recently developed a formula that recommends an asset allocation based in part on your age, income, savings and risk tolerance. The formula is drawn from a paper he co-authored last year and was adapted for The Wall Street Journal.
In many scenarios, the formula recommends a more aggressive, stock-heavy portfolio than other popular guidelines.
It also incorporates more of people’s financial circumstances than common rules of thumb for equity allocation, such as the classic 60/40 division of stocks and bonds or subtracting your age from 100.
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https://www.msn.com/en-us/money/markets/a-yale-professor-s-investment-formula-says-you-need-more-stocks-see-how-it-works/ar-AA1WGqU2?ocid=BingNewsSerp
“It’s more conservative when you have more money saved up,” Choi said.
The formula doesn’t aim to maximize the amount of money investors accumulate, but rather the “utility” they get from spending their money over the course of a lifetime, since that utility declines with each successive dollar."