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cover of episode Should You Be Invested 100% Stocks Before and During Retirement? A Recent Study Says Yes

Should You Be Invested 100% Stocks Before and During Retirement? A Recent Study Says Yes

2024/1/3
logo of podcast Money For the Rest of Us

Money For the Rest of Us
AI Chapters Transcript
Chapters
This chapter challenges the conventional wisdom of life-cycle investing by presenting a recent study that advocates for a 100% stock portfolio throughout retirement. The study uses a broader database of 38 developed market countries to mitigate the bias of using only US data. The results show that a diversified stock portfolio, including international stocks, significantly outperforms other strategies.
  • A new study challenges the traditional approach to retirement investing.
  • The study used data from 38 developed market countries, which is more diverse and comprehensive than most previous studies.
  • The study suggests that a 100% stock portfolio, with half of assets in international stocks, can significantly outperform other strategies in building retirement wealth.

Shownotes Transcript

The pros and cons of investing your retirement assets 100% in equity, including half in international stocks. Why the 4% spending rule is too aggressive.

  • Why historical asset class return studies that use only U.S. data are biased
  • How researchers build a broader database to study retirement outcomes and spending rates
  • How a 100% stock portfolio performed compared to balanced portfolios and target date funds
  • Why investors should have half their assets in international stocks
  • Why a 4% spending rule is too high, and what is the alternative

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Show Notes

Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice by Aizhan Anarkulova, Scott Cederburg, and Michael S. O'Doherty—SSRN)

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets by Aizhan Anarkulova, Scott Cederburg, Michael S. O'Doherty, and Richard W. Sias—SSRN)

Related Episodes

421: Beware of Survivorship Bias When Investing)

326: The New Math of Retirement Spending and Investing)

254: Should You Be 100% Invested In Stocks?)

250: Investing Rule One: Avoid Ruin)

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