goals-based investing
Investing is never done in the abstract. Investing is — and always has been — goals-based.
Assets and liabilities in any portfolio should contribute to liquidity maintenance, income generation, preservation of capital, and growth.
Can goals-based portfolio theory bridge normative and descriptive investment theories?
Are markets more like horses or tractors?
What if our traditional models of choice are not measuring people’s true objectives?
To paraphrase Richard Thaler, all finance is behavioral. In the same spirit, all investment management should be goals-based.
Although a fundamentally important financial concept, modern or mean-variance portfolio theory (MPT) has been of little practical value to retail investors in their asset allocation. Hansi Mehrotra, CFA, believes it’s time to develop a more practical risk-management measure.
Financial advisors have an increasingly important role to play in building sustainable retirement income strategies for their clients. But as is the case with most investment advice, there is no one-size-fits-all approach. To help advisors and investors sort through the issues here is a list of essential reading and resources.