WHY ABANDONING MAXIMUM RETURNS CAN WORK WITH GLIDE PATHS
https://s.yimg.com/ny/api/res/1.2/y_hUCofKO3NJjVbwDBQX7Q--/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD04MDI-/https://media.zenfs.com/en/financial_planning_664/1229d06c2c1a1007a69a1874627646b0
✍️ Vanguard's head of goals-based investing research, Zachary Rayfield, discusses the importance of considering human capital theory in portfolio design, particularly for investors with varying risk tolerances.
👉 Human capital theory suggests that an individual's lifetime earning potential functions as a "bond-like asset" 👉 Younger workers are more willing to take on investment risk due to their high human capital 👉 As people age, their human capital declines, making their portfolio more fragile 👉 Glide paths aim to balance an individual's financial capital with their human capital 👉 Glide paths come in various forms, including target-date series, goal-based approaches, and dynamic models
-- #ZacharyRayfield #NewYork #business
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