Abstract
We analyze whether the efficiency of householdsâ asset mixes is driven by householdsâ wealth as suggested by previous studies. This question is of particular importance when assessing if employing a buy-and-hold strategy with their current asset mix is an appropriate advice for all households. Using the dataset of the Panel on Household Finances by the German central bank and a new approach that extracts household-specific portfolios to measure householdsâ wealth available for investments, we find that more wealthy households do not have a more efficient asset mix. Instead, the gender of the financial knowledgeable person (FKP) and the householdâs risk attitude significantly influence the efficiency of the householdâs asset mix. Our results are robust to household membersâ estimation regarding future savings and the FKPâs formal level of education and financial literacy. A buy-and-hold strategy in low-fee index products could, therefore, considerably enhance both more and less wealthy householdsâ investment success.
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