The Effect of Age on Portfolio Choices: Evidence Form an Italian Pension Fund
37 Pages Posted: 20 Mar 2011
Date Written: July 15, 2010
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: Suggested Citation