Toronto finance professor Moshe Milevsky has written a new book, so this seemed like a good excuse to revisit his favorite question: are you a stock or a bond?
Milevsky believes financial advisors should ask their clients this question before making any asset-allocation decisions. If someone has a risky job, he argues – if they are a stock – then their portfolio should emphasize bonds.
“If a financial advisor says you have a lot of stocks [in your investment portfolio] and should buy bonds, the response should be, ‘My job is a bond,’ “ he said.
Milevsky is adding another layer to the risk formula usually promoted by financial planners, who typically advise clients to lower their risk as they age. Milevsky wants people to avoid the double jeopardy dramatized by Enron Corp. employees, who had high-risk jobs in energy speculation and put their money into high-risk stocks – even worse, they were Enron stocks.
In a recent interview, he rated a few professions on the stock-bond continuum to demonstrate how his theory works. …Learn More
Paul Solman, a business reporter in Boston for the NewsHour on PBS, put together an excellent piece about educating preschool children about saving. In it, Solman interviews Grover and the children of behavioral economist David Ariely of Duke University, among others.
The piece discusses a research study on self-control among young children, which was covered recently by Squared Away.