Working Paper Series, Department of Economics, Uppsala University
Portfolio Allocation over the Life Cycle: Evidence from Swedish Household Data
Abstract: This paper provides empirical evidence on life-cycle
patterns in the asset allocation of Swedish households. Data on household
portfolio allocation are collected from the HINK surveys for the period
1982-1992, and portfolio shares of different asset categories are regressed
on age, period, and cohort dummies as well as socio-economic and
demographic variables. There are evident differences in the age profiles
for the demand of different assets. The fraction of "risky" financial
assets follows a hump-shaped age profile, as does the share of total real
assets. While the probability of ownership of "safe" financial assets
increases over life, the weight in the portfolio has a U-shaped age
pattern. This is also true for the fraction of total financial assets.
Furthermore, there are differences in the asset allocation of different
birth cohorts; the portfolio weight of real assets is relatively higher for
the "baby-boom" generation, while younger generations are more prone to
invest in "risky" financial assets.
Keywords: Life cycle; asset demand; portfolio choice; cohort; differential mortality; Sweden; (follow links to similar papers)
JEL-Codes: C20; D91; E21; G11; J10; (follow links to similar papers)
33 pages, February 1, 2001
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