Abstract
Financial sustainability for individuals has become more important due to the increase in life expectancy. In personalized lifetime financial planning, human capital is critical for incorporating the life-cycle of individuals. This study focuses on human capital modeling based on features such as education level and working industry, and presents how difference in human capital can affect the optimal asset allocation. By analyzing the Korean labor and income panel survey data, fixed effects regression was performed to model human capital and a portfolio model that maximizes utility of total wealth is solved to optimize the lifetime financial plan. The empirical results show that individuals with human capital that are more correlated with stocks are advised to reduce allocation in stocks.
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
