Investment Horizon, Labor Income, and Portfolio Choice of Private Investors
37 Pages Posted: 13 Jan 2009
Date Written: January 9, 2009
I empirically investigate the impact of age and self-reported planning horizon on asset allocation decisions for a broad cross-section of individual investors. I find that age and investment horizon play different roles in determining investors' risky portfolios. When risky investments include 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, independent of investors' age.
Keywords: Investment horizon, portfolio choice, financial planning
JEL Classification: G11
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