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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: Glidepath investing for retirement||Date: 9/26/2012 6:25 PM|
|Author: Watty56||Number: 404783 of 473427|
Rob reports surprising results.
It really isn't surprising.
Part of the problem is that the post left out the standard deviation line from the chart in the article;
Standard deviation $37,670 $41,250 $57,010
In increasing the standard deviation, which is sometimes referred to as risk, from $37K to $57K is over a 51% increase in the standard deviation which is s huge amount.
The key assumptions are the worker saved $1,000 real per year for 41 years.........80% equities/20% bonds gliding to 20%/80% (conventional recommendation)
In the article he uses an example of someone working from the age of 22 to 63. The conventional recommendation of the "age in bonds" would be to go from 22/78 to 63/27 over that time frame. He is using a more extreme set of values when he goes from 20/80 to 80/20 and this could skew the results.
This does feel not right and could be a red flag that he changed the assumptions until his premise looked better.
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