Monday, March 26, 2012
Ken Henry and others think it is dangerous.
At macrobusiness Jackson has run a Monte Carlo simulation.
The median (50th percentile) super fund does better in equites than it would be in fixed interest.
But the 25th percentile fund is worse in equities than it would have been in fixed interest.
As he says:
"The distribution is far more spread for equities, both to the high and low end. If you’re an optimist, it’s all roses in equities. If you’re a pessimist, or just plain unlucky, then maybe you want to bolster your portfolio with something a little less volatile."
There's more. A typical retiree would be better off ignoring the traditional advice about moving from equities to fixed interest in their last decade of work.
Should the Super Industry Invest More in Fixed Interest - Ken Henry
. "Australia’s pension exposure to equities spells doom"
. Our not-so-super super
. Super is a con, perpetrated by people who con themselves