Investment principles for individual retirement accounts
The phenomenal growth of individual retirement accounts in the US, and globally, challenges both individuals and their advisors to rationally manage these investments. The two essential differences between an individual retirement account and an institutional portfolio are the length of the investment horizon and the regularity of monthly contributions. The purpose of this paper is to contrast principles of institutional investing with the management of individual retirement accounts. Using monthly historical data from 1926 to 2005 we evaluate the suitability for managing individual retirement portfolios of seven principles employed in institutional investing. We discover that some of these guidelines can be beneficially applied to the investment management of individual retirement accounts while others need to be reconsidered.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laurence J. Kotlikoff, 2006. "Is the United States bankrupt?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 235-250.
- Constantinides, George M., 1979. "A Note on the Suboptimality of Dollar-Cost Averaging as an Investment Policy," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 14(02), pages 443-450, June.
- George M. Constantinides, 2002.
"Rational Asset Prices,"
NBER Working Papers
8826, National Bureau of Economic Research, Inc.
- Gerald P. Dwyer, 2005. "Social Security private accounts: a risky proposition?," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 1-13.
- Campbell, John Y. & Viceira, Luis M., 2002. "Strategic Asset Allocation: Portfolio Choice for Long-Term Investors," OUP Catalogue, Oxford University Press, number 9780198296942.
- Alan Greenspan, 2005. "Future of the Social Security program and economics of retirement: testimony before the Special Committee on Aging, U.S. Senate, March 15, 2005," Speech 61, Board of Governors of the Federal Reserve System (U.S.).
- Thomas A. Garrett & Russell M. Rhine, 2005. "Social security versus private retirement accounts: a historical analysis," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 103-121.
When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:32:y:2008:i:3:p:393-404. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.