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Portfolio Allocation over the Life Cycle: Evidence from Swedish Household Data

Author

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  • Andersson, Björn

    (Department of Economics)

Abstract

This paper provides empirical evidence on life-cycle patterns in the asset allocation of Swedish households. Data on household portfolio allocation are collected from the HINK surveys for the period 1982-1992, and portfolio shares of different asset categories are regressed on age, period, and cohort dummies as well as socio-economic and demographic variables. There are evident differences in the age profiles for the demand of different assets. The fraction of "risky" financial assets follows a hump-shaped age profile, as does the share of total real assets. While the probability of ownership of "safe" financial assets increases over life, the weight in the portfolio has a U-shaped age pattern. This is also true for the fraction of total financial assets. Furthermore, there are differences in the asset allocation of different birth cohorts; the portfolio weight of real assets is relatively higher for the "baby-boom" generation, while younger generations are more prone to invest in "risky" financial assets.

Suggested Citation

  • Andersson, Björn, 2001. "Portfolio Allocation over the Life Cycle: Evidence from Swedish Household Data," Working Paper Series 2001:4, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2001_004
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    4. Amadeu DaSilva & Mira Farka, 2018. "Asset pricing puzzles in an OLG economy with generalized preference," European Financial Management, European Financial Management Association, vol. 24(3), pages 331-361, June.
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    More about this item

    Keywords

    Life cycle; asset demand; portfolio choice; cohort; differential mortality; Sweden;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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