When compared to investors living in a country with high inflation, investors living in a country with generous state pensions will most likely have allocations to equities and fixed income investments, respectively, that are: Equities Fixed Income A. Lower Lower B. Lower Higher C. Higher Lower D. Higher Higher what are your thoughts?
B? With higher inflation, you would need a much higher return on equities to compensate…
B
B if inflation is high in country XYZ, they need to keep pace with that, and only stocks do that here in the US, inflation is tame, so we have LESS invested in common bOOM
I’m thinking C
I’m thinking C too. The investors w/high pensions don’t have high inflation, they are being compared to a country that does.
They are comparing a country with high inflation and another country with low inflation and generous pensions, isn’t this right, or am I slow today?
I put C as well… That’s what I thought… Not too sure about the answer tho: The need to invest for portfolio growth is higher in inflationary environments and lower in countries where workers receive generous state pensions. So is that suggesting higher allocation in equities??
mambovipi Wrote: ------------------------------------------------------- > I put C as well… That’s what I thought… Not too > sure about the answer tho: > > The need to invest for portfolio growth is higher > in inflationary environments and lower in > countries where workers receive generous state > pensions. > > So is that suggesting higher allocation in > equities?? that would mean B, why C? post real answer please
A) I can understand why the equity investment would be lower but why should fixed income be higher??? After all the generous pensions should mean lower need to supplement with bonds
krisC Wrote: ------------------------------------------------------- > A) I can understand why the equity investment > would be lower but why should fixed income be > higher??? After all the generous pensions should > mean lower need to supplement with bonds hmmm good point, please post REAL answer, thanks
C - What is so tough? Equities adjust directly with inflation while fixed income is inverse to inflation.
what exactly is the question asking? Do we know what kind of inflation there is in this generous pension country?
Ok !!! I change my answer. It should be B) Even though the country might have a generous pension scheme I guess we are talking about ALL the investors and not only the pensioners. In that scenario as the country has a lower inflation it will have lower component of equity investment and a higher fixed income component thus giving us B)
Should the question be "…When compared to investors living in a country with high inflation, investors living in a country with *low inflation and* generous state pensions will most likely have …?
Daj that is the REAL answers… The mock doesn’t have any answers, just some bullsht pdf… that’s why I’m asking here… Also that is the question as it appeared in the mock.
mambovipi Wrote: ------------------------------------------------------- > I put C as well… That’s what I thought… Not too > sure about the answer tho: > > The need to invest for portfolio growth is higher > in inflationary environments and lower in > countries where workers receive generous state > pensions. > > So is that suggesting higher allocation in > equities?? Going with this “answer”, I would say they are saying B, but it doesn’t make sense to me. If you receive a generous pension, then why not invest in riskier securities? You’re protected because of the pensions so you can afford to lose more.
mambovipi Wrote: ------------------------------------------------------- > Daj that is the REAL answers… The mock doesn’t > have any answers, just some bullsht pdf… that’s > why I’m asking here… Also that is the question as > it appeared in the mock. what mock give NO answers???@?$% that is ridiculous.
ALL! Volume 4, page 224, paragraph 2: “The need to invest in equities for portfolio growth is less in Germany, where workers receive generous state pension.” What is the incentive in taking added risk for capital appreciation when you know you’re going to get a fat pension? The whole point in us dumping money in IRAs, 401Ks, etc is due build up our asset base because OASDI/SSI doesn’t pay sh!t and most of us are not lucky CEOs who get fat golden parachutes.
That doesn’t make sense to me. gdiddy, let’s say I tell you I will give you 10 million in 30 years. Would you give a shit right now about things that provide little return with the money you make? What you should do is take your investment money and put it in crazy schemes like making wine out of piss. If it works then you’re a billionaire, if it doesn’t then fuck it, who cares? You’re getting $10 million to retire with anyway.