Define Longevity risk and identify two ways to mitigate for investors.
aka superannuation. the risk of outliving your portfolio. consider lifetime annuities and targeting a portfolio rate of return > spending.
i concur with ilvino.
running out of money after retirement, possible ways to mitigate: 1) plan for longer retirement and do the contributions accordingly 2) spend less save more (it sounds like the first one tho) 3) i don’t think there was a product to hedge this risk
ilvino Wrote: ------------------------------------------------------- > aka superannuation. the risk of outliving your > portfolio. consider lifetime annuities and > targeting a portfolio rate of return > spending. Textbook answer ilvino.
boomtown - i dedicate that answer to the fallen general motors corporation.
passthismofo Wrote: ------------------------------------------------------- > Define Longevity risk and identify two ways to > mitigate for investors. Run out of money solution 1) die as soon possible 2) go live with kids and extended family in the meantime.
Accomplish option 1) by trying to pick up girls at the exam with the opening line “I’d like to open you”.
i don’t get this “I’d like to open you” joke, who is this guy? any links?
lol, thanks
Assume longer life span - this leads to lower discretionary wealth low and more conservative allocation. Consider shorting a bond in the MVO Manage your own portfolio as an insurance (optional)
Hey y’all… be sure to check out the CFA errata… lots of changes to the LOS’s in this section.
itstoohot Wrote: ------------------------------------------------------- > 3) i don’t think there was a product to hedge this > risk Annuities. Guaranteed Minimum Living Benefits – extremely popular product offered by life insurance companies.
^yeah yeah brother i just checked that section…three different types annuities: 1)fixed (risk-free asset) 2)variable (risky holding) 3)equity-index annuity (risk-free asset+call option on equity market returns) +“purchasing an annuity is a product choice quite distinct from the strategic asset allocation decision”