Prior investment outcomes and stock investment in defined contribution plans

摘要

In this study, we employ the 2001-2013 Survey of Consumer Finances to examine how prior investment outcomes affect portfolio allocation in defined contribution (DC) plans. Results show that investors with prior gains are more likely to invest all DC plan assets in stocks. Factors such as risk tolerance and investment horizon positively affect investors' tendency to allocate all DC assets to stocks. These findings have important implications for investors, researchers and financial professionals.