Investment horizon and portfolio choice of private investors

Citation

Veld-Merkoulova YV (2011) Investment horizon and portfolio choice of private investors. International Review of Financial Analysis, 20 (2), pp. 68-75. https://doi.org/10.1016/j.irfa.2011.02.005

Abstract
I empirically investigate the impact of age and self-reported planning horizon on asset allocation decisions of individual investors. I find that age and investment horizon play different roles in determining investors' risky portfolios. When I consider total risky investments, including 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. Finally, less risk-averse investors and individuals with lower rate of time preference invest significantly more in stocks and other risky financial assets.

Keywords
Investment horizon; Household finance; Portfolio choice; Financial planning

Journal
International Review of Financial Analysis: Volume 20, Issue 2