UNC Kenan-Flagler finance professor Harold Zhang won a prestigious award for the outstanding paper on lifelong financial security.

How should investors allocate between bonds and stocks and between tax deferred and taxable accounts? These are two of the important issues addressed by Zhang and his colleagues — Robert M. Dammon and Chester S. Spatt of Carnegie Mellon — winners of the TIAA-CREF Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security.

The paper, "Optimal Asset Allocation and Allocation with Taxable and Tax-Deferred Investing," appeared in the June 2004 issue of The Journal of Finance.

The winning article analyzes the optimal asset allocation (deciding how much of each asset to hold) and location (deciding how much of which assets to hold in the taxable and tax-deferred accounts) decisions for investors making both taxable and tax-deferred investments. This is in striking contrast to the traditional approach to financial planning, in which the interaction between the taxable and tax-deferred accounts is largely ignored. Their findings have important implications for how individuals should allocate their assets.

The award, to be presented in January 2005, is named after Nobel Prize winner Paul Samuelson in honor of his achievements in the field of economics, as well as for his service as a CREF trustee.

TIAA-CREF is the premier pension system for people employed in education and research in the U.S., serving approximately 15,000 institutions and 2.5 million participants. The organization also serves the general public with mutual funds, annuities, IRAs, insurance, and trust services and is the leading manager of state-sponsored college saving programs.

For more information on the award, visit http://www.tiaa-crefinstitute.org/Awards/2004winr.htm