LOS 13.e: Discuss the financial market risk, longevity risk, and savings risk faced by investors in retirement and explain how these risks can be reduced by appropriate portfolio diversification, insurance products, and savings discipline.
Kapaln Book Last bullet point:
-As FC increases over time, the risk taken with the FC should be positively related to the riskiness of the HC. In other words, if the remaining HC is risky, invest more FC in equity but if the remaining HC is lower risk, take less risk with the FC.
Can someone please help explain above? Probably because of my poor reading skill…keep reading but still fail to understand it… Thanks.