Risk Tolerance and Asset Allocation for Investors Nearing Retirement

TitleRisk Tolerance and Asset Allocation for Investors Nearing Retirement
Publication TypeJournal Article
Year of Publication2000
AuthorsHariharan, G, Chapman, KS, Domian, DL
JournalFinancial Services Review
Volume9
Issue2
Pagination159-170
Call Numberpubs_2000_Hariharan_GFinServRev.pdf
KeywordsNet Worth and Assets, Risk Taking
Abstract

This paper uses a large individual-level data set to isolate the effects of risk tolerance on portfolio composition. We test and confirm two predictions of the Capital Asset Pricing Model: (1) increased risk tolerance reduces an individual's propensity to purchase risk-free assets; and (2) higher risk tolerance does not affect the composition of an individual's portfolio of risky assets. More specifically, we find that risk tolerant investors nearing retirement do not reduce their bond allocations in order to buy more stock.

URLhttp://www.sciencedirect.com/science?_ob=ArticleURLand_udi=B6W4D-41Y88XH-4and_coverDate=09 2F30 2F2000and_alid=93067435and_rdoc=1and_fmt=and_orig=searchand_qd=1and_cdi=6540and_sort=dandview=cand_acct=C000007678and_version=1and_urlVersion=0and_userid=99318
Endnote Keywords

Portfolio choice/Asset allocation/Risk aversion

Endnote ID

11802

Citation Key6720