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Investment horizon and portfolio choice of private investors

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Author Info

  • Veld-Merkoulova, Yulia V.

Abstract

I empirically investigate the impact of age and self-reported planning horizon on asset allocation decisions of individual investors. I find that age and investment horizon play different roles in determining investors' risky portfolios. When I consider total risky investments, including real estate, the share of risky assets declines with age. Planning horizon tends to influence only investments in financial risky assets, such as stocks, options, and mutual funds. A longer planning horizon leads to an increasing share of risky financial investments. Finally, less risk-averse investors and individuals with lower rate of time preference invest significantly more in stocks and other risky financial assets.

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File URL: http://www.sciencedirect.com/science/article/B6W4W-526SPDK-1/2/95dd435f01b032bfbfd0d89cf62bd142
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Bibliographic Info

Article provided by Elsevier in its journal International Review of Financial Analysis.

Volume (Year): 20 (2011)
Issue (Month): 2 (April)
Pages: 68-75

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Handle: RePEc:eee:finana:v:20:y:2011:i:2:p:68-75

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Web page: http://www.elsevier.com/locate/inca/620166

Related research

Keywords: Investment horizon Household finance Portfolio choice Financial planning;

References

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Cited by:
  1. Alexandra Spicer & Olena Stavrunova & Susan Thorp, 2013. "How Portfolios Evolve After Retirement: Evidence from Australia," CAMA Working Papers 2013-40, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. Susan Black & Lamorna Rogers & Albina Soultanaeva, 2012. "Households' Appetite for Financial Risk," RBA Bulletin, Reserve Bank of Australia, pages 37-42, June.

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