Make Less Money, Take More Risk?
The arguments for and against.
There are two schools of thought on whether those who make less money should assume more risk in their portfolios.
In a recent video interview, Morningstar’s Laura Lutton--who also happens to be this columnist’s manager--argues for the affirmative. If you’re shorter, slower, and can’t jump as high as your opponent, you won’t get many rebounds unless you outwork her. (True, that was not Laura’s analogy.) Similarly, those with lower career earnings must do something better than their wealthier peers, if they attain equality in retirement--for example, holding a higher stock weighting.