I was looking over Malkiel's "Random Walk . . ." again, and was struck as always by the concentration on age in driving allocation decisions, with no regard to assets vs needs. I have pondered this for some time, because I manage my 90 year old mother's finances. On the one hand, it can be argued that she has little time (maybe 15 years or so -- longevity runs in the family) to recover from a market loss, so she should be mostly in fixed income investments. On the other hand, her assets are far greater than her income needs, so she can afford to be more agressive, providing her income is secured. I maintain a 15 year buffer in fixed income securities for her, 7 years of which are in cash equivalents. But that results in an asset allocation that is far more agressive than her age would suggest. As the beneficiary of her estate, such an agressive allocation could be argued to serve me rather than her. When I pass the estate on, it will go to various charities, e.g. open space preserves, schools, and so forth. I think I'm doing the right thing with her assets, but I feel a sense of conflict. I wish there were more discussion of assets vs need in allocation decisions.db
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