Review of Finance Vol. 7 No. 3 2003
Household Portfolio Choices in Taxable and Tax-Deferred Accounts: Another Puzzle?
open access
Abstract
This paper provides a survey of existing literature on portfolio allocations in conventional and tax-deferred investment habitats. A long-standing puzzle in this literature has been the dissonance between the theoretical prediction of tax-efficient portfolio choices and observed portfolio allocations. I clarify this prediction and offer a different perspective by emphasizing the importance of uninsurable labor income risk and restrictions on accessibility of tax-deferred assets. I identify the key factors in dual-habitat portfolio decisions and highlight the necessary ingredients for producing non-tax-efficient, or precautionary, allocations.
- DOI
- 10.1023/b:eufi.0000022154.18119.07
- Volume
- 7
- Issue
- 3
- Pages
- 547-582
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex