Abstract

http://ssrn.com/abstract=991961
 
 

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Perspectives: Making Investment Choices as Simple as Possible, but not Simpler


Zvi Bodie


Boston University - Department of Finance & Economics

Jonathan Treussard


Ziff Brothers Investments - Risk Management


Financial Analysts Journal, Vol. 63, No. 6, pp. 42-47, 2007

Abstract:     
Target-date funds (TDFs) for retirement, also known as life-cycle funds, are being offered as a simple solution to the investment task of participants in self-directed retirement plans. A TDF is a "fund of funds" diversified across stocks, bonds, and cash with the feature that the proportion invested in stocks is automatically reduced as time passes. Empirical evidence suggests that a simple TDF strategy would be an improvement over the choices currently made by many uninformed plan participants. This article explores a way to achieve even greater improvement for people who are very risk averse and have high exposure to market risk through their labor.

Keywords: Private Wealth Management, Asset Allocation, Investment Policy Formulation, Portfolio Management, Asset Allocation


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Date posted: June 11, 2007  

Suggested Citation

Bodie, Zvi and Treussard, Jonathan, Perspectives: Making Investment Choices as Simple as Possible, but not Simpler. Financial Analysts Journal, Vol. 63, No. 6, pp. 42-47, 2007. Available at SSRN: http://ssrn.com/abstract=991961

Contact Information

Zvi Bodie (Contact Author)
Boston University - Department of Finance & Economics ( email )
United States
HOME PAGE: http://www.zvibodie.com
Jonathan Treussard
Ziff Brothers Investments - Risk Management ( email )
New York, NY
United States
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