William is a recent retiree who is 68 years old. He has no dependents. His tax-deferred savings are $800,000. Any income he receives from his portfolio will be subject to tax. He desires $60,000 adjusted for inflation for the rest of his life (assume life expectancy 93 years). He receives $10,000 per year from social security which is inflation adjusted. He also receives a pension of 8,000 Canadian Dollars from a Canadian company he worked at during his career.

Wiliam has a mortgage-free home and a small vacation home which he uses very infrequently. He expects to spend $6,000 every five years for major expenses such as purchase of car and vacations. William has always been interested in conservation of nature and trees. He would like to use some of his savings and estate (after his death) to a charity focused on conservation of nature.

In the past, William has always sold all his stocks whenever the market has experienced volatility. He has then invested back only when the market has "fully recovered". He is also uncomfortable investing in stocks outside the US and Canada as he feels that the other markets are not transparent, and he does not know enough about how they function.

(a) Prepare the investment policy for William.

(b) Identify the most appropriate portfolio from the below list that William can use. Justify your response.

Asset Class Portfolio-A Portfolio-B Portfolio-C

US Stocks 80% 60% 50%

US Bonds 10% 20% 30%

Canadian Stocks 5% 10%

European and Asian Stocks 5% 10%

Inflation-protected Bonds 5% 10%

Gold 5%

(c) If you are acting as an investment manager to William, identify any additional asset class that William would be interested in investing given his unique situation and preferences and also prepare one short document to help him understand his behavior biases and ways to mitigate them.