The Effect of Age on Portfolio Choices: Evidence Form an Italian Pension Fund

37 Pages Posted: 20 Mar 2011

Date Written: July 15, 2010

Abstract

Optimal Portfolio Theory prescribes that investors reduce their exposure to financial market risk as they get near to retirement. To assess the effect of ageing on portfolio choices, we study the case of an Italian defined contribution pension fund during the period 2002-08. We find that on average the willingness to hold risky assets does indeed significantly decrease with age, but we also document that inertial behaviour is quite widespread, and can be very costly.

Keywords: pension funds, portfolio choice

JEL Classification: G21, G23

Suggested Citation

Cappelletti, Giuseppe and Guazzarotti, Giovanni and Tommasino, Pietro, The Effect of Age on Portfolio Choices: Evidence Form an Italian Pension Fund (July 15, 2010). Bank of Italy Temi di Discussione (Working Paper) No. 768. Available at SSRN: https://ssrn.com/abstract=1786389 or http://dx.doi.org/10.2139/ssrn.1786389

Giuseppe Cappelletti

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Giovanni Guazzarotti (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Pietro Tommasino

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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