New machine learning framework increases probability of investments

University of Waterloo researchers have developed a new framework that increases the probability of meeting your investment target by threefold.

The data-driven approach, which is enhanced by machine learning, significantly outperforms traditional methods used by investors and people saving for retirement.

Their research was motivated by the fact that both the private and public sectors are shifting away from defined benefit (DB) pension plans to defined contribution (DC) plans – a trend recently highlighted in a Federal Reserve Economics Research Note.

The novel approach provides a strategy for employees who, as participants in a DC pension plan, will have to make decisions on how to allocate their assets to ensure a reasonable level of salary replacement upon retirement.