Question

1. Jeremy is a 45-year-old pilot who works for United Airlines. Jeremy hopes to retire in 20 years and uses his savings to purchase a stock portfolio to fund his retirement. Would you recommend that Jeremy’s retirement portfolio include an above-average, average, or below- average weighting in airlines stocks? Why?

Answer 1

Jeremy should put below average weighting in airline stocks.

Jeremy's main source of Income is coming from Airline. Consider the current scenario where the aviation industry is suffering huge losses and pilots are not getting paid. So his primary income has taken a hit. Now if his investment is also in Airline stocks, then the Airline stocks are performing extremely bad. So both his primary and secondary income will be at risk.

So it is always preferred that secondary income should come from a different sector than primary income.