Finance Professor Meir Statman Head Shot

Finance Professor Meir Statman Head Shot

Meir Statman : 3 Gut-Check Investing Questions for Wealthy Millennials : Forbes

Finance Professor Meir Statman offered three questions to serve as guidelines before making impulsive purchases to satisfy short-term desires in a piece for Forbes.
Glenn Klimek Professor of Finance Meir Statman Head Shot

Meir Statman, the Glenn Klimek Professor of Finance, was the feature of an article for Forbes which aimed at getting wealthy millennials to simply reconsider the intentionality of indulgent, impulsive purchases. As Professor Statman points out, an educated and intentional decision to splurge once in a while for personal satisfaction shouldn’t be considered irrational.

An excerpt from the article:

Even a substantial portfolio won’t grow to satisfy long-term goals if it is parked mostly in cash. It’s worth asking regardless of your net worth: are you making a conscious choice? Try this 3-question gut check to see if your portfolio actually matches your goals:

  1. What is your portfolio allocation to cash as a percentage of the whole and in actual value?
  2. What does that amount equal when compounded over 10, 20, 30 years if it were invested, assuming a long-term average 7% rate of return?
  3. Ok, gut-check time: Based on that calculation, do you still favor spending now, or maintaining your current cash position instead of having the value of your future long-term capital gains in 10, 20 or 30 years? If you think ahead, what would you like your life to look like in those years? Make sure you really are making that choice, rather than letting the drift of inertia prioritize cash over compounding.

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