Analysing the c-minus-age strategy for life-cycle investing

Christine W. Lai, Tsung Chyan Lai

Research output: Contribution to journalArticle

Abstract

The c-minus-age strategy is a popular strategy for life-cycle investing. When applying the c-minus-age strategy, an investor first chooses an indirect preference parameter c and at age t will hold a percentage of c minus t in equity assets. In this article, we use a linear and a multiplicative mean-variance utility function to quantitatively analyse the term structure of the mean-variance tradeoffs implied by the c-minus-age strategy. We also provide an optimal procedure to determine c, based on the two direct preference parameters, elicited from an investor, of a multiplicative mean-variance utility function.

Original languageEnglish
Pages (from-to)711-718
Number of pages8
JournalApplied Economics Letters
Volume16
Issue number7
DOIs
Publication statusPublished - 2009 Jul 16

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Investing
Life cycle
Mean-variance
Investors
Utility function
Trade-offs
Assets
Equity
Term structure

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Analysing the c-minus-age strategy for life-cycle investing. / Lai, Christine W.; Lai, Tsung Chyan.

In: Applied Economics Letters, Vol. 16, No. 7, 16.07.2009, p. 711-718.

Research output: Contribution to journalArticle

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