Ch.12 · Model Portfolios and Asset Allocation · easy
A 35-year-old investor plans to retire at 60. For retirement savings, which asset allocation is most appropriate at this stage?
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EXPLANATION
With 25 years to retirement, the investor has a long horizon and can absorb equity volatility. A predominantly equity allocation (70-80%) allows for inflation-beating growth while a debt component provides stability. As retirement approaches, the equity allocation should be gradually reduced.
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