Based on many scary headlines recently, many Americans may have viewed Social Security as an asset To disappear Investor Charles Ellis said it was from their financial future rather than being part of it, but that could be a bigger factor in portfolio success.
Ellis, who has written many books on investment and helps open up the index fund space, said the stable income provided by Social Security may affect asset allocation decisions that improve overall performance.
“We don’t talk about it. We don’t measure it. We don’t quantify it. But it’s a substantial asset,” Ellis told CNBC’s Bob Pisani.ETF Edge“This week.
He believes that social security functions similar to inflation-protected bonds. However, it is rarely included in the investor asset allocation plan.
Ellis said neglecting social security could be a big mistake.
“If you don’t order in the Social Security program for orders of $250 (000) to $350,000,” Ellis said on “ETF Edge.”
He added that the failure to realize this could lead to over-cautious investment.
this S&P 500 According to New York University Stern, annual yields have averaged about 12% since 1928. this US Treasury Department for 10 years About 5% was returned during the same period.
Ellis said a stable income stream of Social Security could increase stock exposure.
“Almost anyone who looks at the reason for holding a bond is talking about the desire to reduce volatility,” he said.
He gives an example of an inheritance of adult children’s expectations as parallel thought experiments. “If you have wealthy parents that will bring you inheritance in the future, then anything you really know is taken seriously, why not include them in your mind so that you don’t overweight yourself with a fixed income?”
“Why not include (Social Security)?” Ellis said.
