What are the mechanics of Upside Investing?
It isn't clear to me exactly how the Upside Investing logic works. I have a few questions below.
Question #1 - What happens to net contributions after we start converting stocks to safe assets but before we expect to have converted all stocks to safe assets?
Let's say we will start to convert stocks to safe assets in 2020 and finish in year 2030. In year 2021 we expect a big inflow of cash which is captured in our Earnings. Where will that inflow go? Will it all be directed to safe assets? Will any be directed to risky assets?
Question #2 - How exactly is the translation from risky to safe assets handled?
Let's say we want to begin our transfer in year 2020 and finish in year 2030. At the end of year 2019 50% of our portfolio is not in 'risky' assets. So we begin 2020 with 50% risky/50% safe. How exactly will the upside investment calculator determine the path from 50% to 100% Does it just divide over the time and apply evenly? In other words we have 10 years to get the rest of our portfolio covered so does it convert 10% of our risky assets a year?