Professor Musumeci is extending his previous research funded by the grant: "Optimal Investment Allocations Given Fixed Periodic Contributions." In the earlier grant he developed software that uses dynamic programming simulations to analyze the problem of how people can maximize their lifetime utility given three asset choices (bills, bonds, and stocks) and fixed periodic contributions in a participant-directed defined contribution pension plan. The current project extends the software to provide additional insights about asset allocation. In addition to the three asset classes of bills, bonds, and stocks, a real estate index is also incorporated. Asset allocations are in increments of 5 percent rather than 10 percent as in the original software. The correlation of returns among asset classes is also a subject of investigation.
