Diversification is a well-known way of getting the proverbial free lunch: By spreading money across different kinds of investments, you can earn the same return with lower risk (or a higher return for the same risk).
What if we are missing out on another free lunch?
That free lunch is time diversification. In Lifecycle Investing, Ian Ayres and Barry Nalebuff—two of the most innovative thinkers in business, law, and economics—have developed tools that will allow investors to better diversify their portfolios across time. By using leverage when young—a controversial idea that sparked hate mail when the authors first floated it in the pages of Forbes—investors can substantially reduce lifetime risk while improving their returns.
In today’s post-pension reality, you’re the one responsible for planning and investing for retirement. And you only get one chance to get it right. A smarter allocation across time can improve your nest egg by 50 percent without adding risk. (That’s a lot easier that increasing your savings by 50 percent.)
In Lifecycle Investing, you will learn
- How to figure out the level of exposure and leverage that’s right for you
- What to do if you’re already 30, 40, or 50 years old and how to help your kids and grandkids
- How the Lifecycle Investing strategy would have performed over the last 138 years
- How to combine Lifecycle Investing with market timing
- When not to adopt the Lifecycle Investing strategy
Clearly written and backed by rigorous research, Lifecycle Investing presents a simple but radical idea that will shake up how you think about retirement investing.