Personal Investing: Advice, Theory, and Evidence from a Survey of Tiaa-Cref Participants

Abstract

This paper examines individual asset-allocation behavior using data from a unique survey containing information on the composition of the respondents' total asset holdings both inside and outside of their retirement accounts. We find that individual asset allocations are consistent with the recommendations of expert practitioners and with the prescriptions of economic theory. The survey respondents maintain in cash and near-cash investments a proportion of their wealth that declines as wealth increases. They hold these safe assets outside of their retirement accounts. The proportion of total assets that they hold in equities declines with age and rises with wealth. However, respondents do not appear to manage their assets across retirement and non-retirement accounts to maximize tax efficiency.

JEL Classification: D91