Advanced Search
MyIDEAS: Login to save this article or follow this journal

Private Households Display Strong Aversion to Investment Risk

Contents:

Author Info

  • Nataliya Barasinska
  • Dorothea Schäfer
  • Andreas Stephan

Abstract

The broadest possible diversification of investments is considered an important strategy for minimizing investment risk. Most households in Germany do distribute their financial assets over several types of investment. However, investment behavior is only partially consistent with the overall readiness for risk-taking reported by heads of households. This is demonstrated by a current empirical study based on data from the Socio-Economic Panel Study (SOEP). The probability of diversification does tend to rise according to the degree of risk aversion, yet not when it comes to a "fully diversified investment basket." With a higher fear of risk, the tendency to fill a portfolio with every kind of investment falls. Clearly, households make decisions in keeping with a principle propagated by Keynes: security and liquidity come first. The readiness to invest in riskier assets rises with the number of secure investments already in place in the portfolio.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.96058.de/diw_wr_2009-2.pdf
Download Restriction: no

Bibliographic Info

Article provided by DIW Berlin, German Institute for Economic Research in its journal Weekly Report.

Volume (Year): 5 (2009)
Issue (Month): 2 ()
Pages: 13-18

as in new window
Handle: RePEc:diw:diwwrp:wr5-2

Contact details of provider:
Postal: Mohrenstraße 58, D-10117 Berlin
Phone: xx49-30-89789-0
Fax: xx49-30-89789-200
Email:
Web page: http://www.diw.de/en
More information through EDIRC

Related research

Keywords: Household finances; Diversification; Financial portfolio;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:diw:diwwrp:wr5-2. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.