alt Hacker NewsMy homeowners insurance isn't "cost-effective" either but I still do it. I think the reason that investors don't is because they are greedy or irrational or both.
That was the message that I got from a financial podcast I listened to a couple weeks ago anyway.
Replies
duzer65657 • yesterday at 5:38 PM
investors are irrational but actually tend to go the other way - too risk adverse. I'm not sure what a "greedy" investor is, TBH.
I'd content that homeowners' insurance is quite cost-effective, because there isn't a cheaper alternative to hedge your risk.
I'm saying that for the cost of buying puts to hedge against equity downside in a retirement portfolio, for any given level of risk, you'd probably be better off just selling some of the equities and buying bonds instead.
e.g. try and find any equity-focused ETF with downside protection that generally outperforms a bog-standard stock/bond split total-market ETF for whatever measure of volatility/downside protection that you want.