The Floor-Leverage Rule for Retirement
The Floor-Leverage Rule is a spending and investment strategy designed for retirees that can tolerate investment risk, but insist on sustainable spending. The rule calls for purchasing a spending guarantee with 85% of wealth and investing the remaining 15% in equities with 3x leverage. Surprisingly, this leverage is a tool for managing risk. We compare our rule to some popular strategies, illustrate it for a variety of retiree preferences, and evaluate its historical performance.
Year of publication: |
2013-12
|
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Authors: | Scott, Jason ; Watson, John |
Institutions: | Stanford Institute for Economic Policy Research (SIEPR), Stanford University |
Saved in:
freely available
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