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Life Cycle Portfolio Choice: A Swiss Perspective

Summary

We use panel data from the Swiss Labor Force Survey to estimate age-earnings profiles as well as transitory and permanent income shock variances for investor groups distinguished by gender, education and activity rate. Estimation results are then used to stylize several different Swiss investor types. Finally, we determine optimal life cycle consumption, savings and risky asset share for these investor types using a recent computational life cycle model of portfolio choice suggested by Cocco et al. (2005). We are particularly interested in the allocation differences between the investor types and their normative implications.

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Correspondence to Florian Zainhofer.

Additional information

This project was completed while the author was visiting CEMFI in Madrid under Swiss National Science Foundation research grant no. PBFR1-115552. I wish to thank two anonymous referees, my thesis advisor Martin Wallmeier and Johannes Binswanger for their constructive advice and guidance. I am also grateful to seminar participants at Fribourg University for valuable comments and suggestions, Pawel Bednarek for granting me access to and providing help with Fribourg University’s high performance computing cluster, Lorenz Küng for helpful comments on an earlier draft of the empiric part, Michel Kolly and Sandra Siegenthaler from the Swiss Federal Office of Statistics (FOS) for help with the SLFS data and Elisabeth Aebischer (also FOS) for providing the mortality data. All errors are my own.

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Zainhofer, F. Life Cycle Portfolio Choice: A Swiss Perspective. Swiss J Economics Statistics 143, 187–238 (2007). https://doi.org/10.1007/BF03399238

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Keywords

  • Personal finance
  • financial planning
  • life cycle model
  • portfolio choice

JEL classification

  • G11
  • D14
  • D91
  • H55