Optimal Portfolio Management for Individual Pension Plans
University of Toulouse 1 - Industrial Economic Institute (IDEI); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
CESifo Working Paper Series No. 1394
We explore the various arguments for and against the recommendation that younger households should invest a larger share of their pension wealth in risky assets. The ability of young agents to compensate their financial losses by saving more during their career provides the strongest argument in favour of younger people investing more aggressively in the stock market. Mean reversion in stock returns yields another argument. However, the uninsurability of the risky human capital goes in the opposite direction, together with the imperfect knowledge that young investors have about the distribution of asset returns.
Number of Pages in PDF File: 26
Keywords: dynamic portfolio choice, pension plan, retirement, time horizon
JEL Classification: G11working papers series
Date posted: February 4, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.437 seconds