Asset Allocation Case Studies
Return Assumptions Matter:
A large "equity
risk premium" justifies higher asset allocations
matters: Monte Carlo simulations may exaggerate the risk
Investment Behavior Matters:
Would you increase (decrease) your allocation in bear (bull) markets?
Testing "Age in Bonds"
Time Frame and Other Financial Circumstances Matter:
The shorter the time frame, or the bigger one's current portfolio, the riskier an aggressive asset allocation is likely to be
Someone setting aside money to leave as an inheritance could use it as a buffer against the risks of an aggressive
Spending Behavior Matters:
Are you an overly-cautious spender?
How flexible is your retirement budget?