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Lifecycle Investing, Risk Parity Portfolios, and Why Stocks Are Riskier in the Long Run

27 min • 9 februari 2022

How lifecycle investing and risk parity portfolios can assist you in having sufficient assets to retire. What are the two types of time diversification and why is one flawed?

Topics covered include:

What is settled work and what are some examples
How does lifecycle investing work and should you consider it
Why investing in stocks and other volatile asset classes is riskier over longer holding periods
What are risk-parity portfolios and how to evaluate them

Thanks to Masterworks for sponsoring the episode.

For more information on this episode click here.

Show Notes

The moral calculations of a billionaire by Eli Saslow—The Washington Post

Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk by Ian Ayres and Barry J. Nalebuff

Lifecycle Investing - Leveraging when young, Forum Discussion by Steve Reading on bogleheads.org

What Practitioners Need to Know… About Time Diversification (corrected March 2015) by Mark Kritzman—Financial Analysts Journal Volume 71, Number 1

Wishful Thinking About the Risk of Stocks in the Long Run: Consequences for Defined Contribution and Defined Benefit Retirement Plans by Zvi Bodie

Pension Obligation Bonds: Know Their Appeal and Pitfalls by Todd Tauzer—Segal

Shrinkage Estimation in Risk Parity Portfolios by Nabil Alkafri and Christoph Frey

Portfolio Charts

How to Invest in Closed-End Funds—Money For the Rest of Us