RISK MANAGEMENT STRATEGIES

Franck Nicolas

Chapter 7 in Investment Strategies for Retirement, 2019, pp 195-232 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Both having an efficient SAA that defines the risk at a level we can support to match our investment goal and having a good portfolio construction that diversifies risks are not sufficient to eliminate the risk. Figure 0 shows the impact of volatility at an average of 15% and 8% on a $100,000 portfolio from which income is drawn at $5,000 per annum. With volatility at 15% there is a 40% chance of running out of money by year 25, whereas at 8% volatility the odds of running out of money would be only 25%. We take this level of 25 years because this is when a pure guaranteed portfolio will be itself extinguished (the probability of ruin becomes 100%)…

Keywords: Retirement Investment Strategies; Pension Financing; Retirement Planning; Personal Finance; Retirement Savings; Asset Management (search for similar items in EconPapers)
JEL-codes: D14 J13 (search for similar items in EconPapers)
Date: 2019
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