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Comment by divbzero | Hacker News Reader

> An controversial book on investing I recently read is Lifecycle Investing which argues that young people are often much too conservative in their investment strategy, because they should model their future earnings as a bond and allocate enough to equities to compensate for holding this bond, even leveraging up to 100% to get the right allocation.

That’s a pretty interesting idea. I wouldn’t take the future earnings = bond concept literally, especially if you’re in a high volatility profession, but it seems useful as a mental check when assessing asset allocations.

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You can do the same thing with Social Security. It’s basically a forced annuity, so your private investing strategy can be more aggressive than if you did not have access to Social Security.

Of course this is only true for people who do have access to Social Security. Those who do, can create an account on the Social Security website and generate an estimate of your expected benefit.

This is not controversial, at least not in Denmark. All big pension providers invests your money in this way (unless you explicitly drop out).

I’m an actuary and reasearcher, and the theory is well explained in the academic literature. And you are of course right with respect to the volatility of your future earnings.

If you were guaranteed some perpetual income if you were unable to work for any reason (including getting fired and just not being able to find a job) I think it'd be a great model. In the US I think the model is too risky given the huge salaries and our collective precarity.

Depends though. For example if you are say 30. Own a house with decent mortgage cheaper than rent. If you have let's say more invested than your total debt including mortgage not counting hopefully equity in the house. Plus 2-4 years invested in taxable account. Why not go 100 stock in retirement accounts.

Working in tech you can bank alot of money quickly. If you keep your lifestyle low. Then if something happens and everything blows up. If you have enough saved you can get by. Plus alot benefits in the united states are based on income not assets.

I have thought a lot about this. I have been extremely lucky to fall into a decent tech job that is way better than working for my local university a few years ago.

Our current spending for a year with so and I is around 60k a year.

The 4 percent rule says that is about 1.5 million or so. Not there yet plus I like working so far.

But if I have say 500k saved and something happens. I can withdraw around 20k a year. But if let's both of us got minimum wage jobs. So 30 an hour total we can cover that gap.

How long would you expect someone in a high volatility profession to be out of work for? The logic would really only be flawed if someone became long term unemployed or didn't have enough cash reserve to cover a few months of temporary unemployment and hence was risking selling equities from savings at a time of unemployment (which could well correlate with low equity valuations)

I found it comforting to realize that long-term unemployment is quite unusual, less than 6% of the unemployed (who, even in the depths of a recession, are low double digits) for 'Professional and Business Services': https://fivethirtyeight.com/features/the-biggest-predictor-o...

Obviously, I can't speak for everyone reading this, but if you're getting pinged by recruiters regularly right now, I'd bet that you'll be able to find something within 6 months even in the next recession.

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