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| Author: | Poterba, J.M. |
| Title: | Portfolio risk and self-directed retirement saving programmes |
| Journal: | Economic Journal
2004 : MAR, VOL. 114:494, p. C26-C51 |
| Index terms: | Financial markets Retirement Wealth Pensions Risk USA |
| Language: | eng |
| Abstract: | Defined contribution retirement (here as: ret.) plans expose ret. savers to financial market risks. This paper explores the costs of ret. wealth risk. It begins by describing the holding of company stock in 401(k) plans in the U.S, an investment choice yielding a poorly diversified retirement portfolio (here as: p-o-d.) The composition of household wealth at ret. is summarized investigating how the degree of diversification in ret. assets affects expected utility. The cost of holding a poorly d-r-p. is very sensitive to whether or not the ret. saver has other assets that provide a floor for ret. consumption. |
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