Time Diversification and Contributions
MetadataShow full item record
The time diversification debate examines the relationship between risk and investment horizon. The debate has generally considered wealth to be a function only of returns. This paper considers the practicalities of this assumption (particularly in light of the broader pension finance debate) by examining two further accumulation models. Our findings reveal that one particular variable - contributions - significantly impacts terminal wealth. Furthermore, we find that measures proposed as ways of studying time diversification generally ignore the influence of contributions. If the time diversification debate is truly about the risks of long term investing, considering realistic accumulation models should be the first step to understanding the relationship between risk and investment horizon.
Academy of Taiwan Business Management Review
Copyright 2014 Academy of Taiwan Business Management Review. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.