Afford Anything Q&A: The Efficient Frontier Was Perfect Until HR Got Involved
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Jan 28, 2025 Explore the challenges of optimizing 401k investments with limited fund options and learn how to enhance your portfolio performance. Discover the differences between value and growth investing using Amazon as a case study. Delve into the importance of tracking your net worth and managing investment risks, along with practical strategies for asset allocation. The discussion emphasizes the need for regular financial reviews and how tracking both finances and health metrics can lead to greater awareness and accountability for better long-term outcomes.
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Understanding the Efficient Frontier
- The Efficient Frontier helps investors maximize returns for a given risk level or minimize risk for a target return.
- It visually represents the optimal mix of assets, considering time frame, risk tolerance, and return goals.
Multi-Fund Portfolio Strategy
- Consider Paul Merriman's research, which shows how multi-fund portfolios can outperform single-fund strategies.
- Explore four-fund and ten-fund portfolios aligned with the Efficient Frontier for potentially higher returns.
Efficient Frontier Drift and Value Investing
- The Efficient Frontier drifts over time, so regularly review and adjust your portfolio.
- Merriman's research highlights the historical outperformance of value investing over growth investing.