R4GoodPersonalFinances (version 1.2.0)

plot_risk_adjusted_returns: Plotting risk adjusted returns

Description

Plots the risk adjusted returns for portfolios of various allocations to the risky asset.

Usage

plot_risk_adjusted_returns(
  safe_asset_return,
  risky_asset_return_mean,
  risky_asset_return_sd,
  risk_aversion = 2,
  current_risky_asset_allocation = NULL
)

Value

A ggplot2::ggplot() object.

Arguments

safe_asset_return

A numeric. The expected yearly return of the safe asset.

risky_asset_return_mean

A numeric. The expected (average) yearly return of the risky asset.

risky_asset_return_sd

A numeric. The standard deviation of the yearly returns of the risky asset.

risk_aversion

A numeric. The risk aversion coefficient.

current_risky_asset_allocation

A numeric. The current allocation to the risky asset. For comparison with the optimal allocation.

See Also

• How to Determine Our Optimal Asset Allocation?

• Haghani V., White J. (2023) "The Missing Billionaires: A Guide to Better Financial Decisions." ISBN:978-1-119-74791-8.

Examples

plot_risk_adjusted_returns(
  safe_asset_return              = 0.02,
  risky_asset_return_mean        = 0.04,
  risky_asset_return_sd          = 0.15,
  risk_aversion                  = 2,
  current_risky_asset_allocation = 0.8
)