Do older investors make better investment decisions?
Open accessAbstract
This paper examines the investment decisions of older individual investors. We find that older and experienced investors are more likely to follow rules of thumb that reflect greater investment knowledge. However, older investors are less effective in applying their investment knowledge and exhibit worse investment skill, especially if they are less educated, earn lower income, and belong to minority racial/ethnic groups. Overall, the adverse effects of aging dominate the positive effects of experience. These results indicate that older investors' portfolio decisions reflect greater knowledge about investing, but investment skill deteriorates with age due to the adverse effects of cognitive aging.
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- Authors
- Korniotis, G. M., & Kumar, A.
- Affiliations
- University of Miami (US)
- Venue
- Review of Economics and Statistics
- Publisher
- MIT Press
- Published
- 2011-02
- Volume
- 93
- Issue
- 1
- Pages
- 244-265
- ISSN
- 0034-6535 (ISSN-L)
- 1530-9142
- OpenAlex
- W2089845703
- Cited by
- 565
- References
- 5
- Citations by year
- 2026: 22 · 2025: 40 · 2024: 42 · 2023: 36 · 2022: 84 · 2021: 34 · 2020: 33 · 2019: 28 · 2018: 36 · 2017: 30 · 2016: 24 · 2015: 28 · 2014: 36 · 2013: 26 · 2012: 22
- FWCI
- 91.80
- Type
- journal article
- Language
- en
- Open access
- green
- papers.ssrn.com
- Locations
- The Review of Economics and Statistics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- SSRN Electronic Journal (submittedVersion)
- Figshare (submittedVersion, cc-by)
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy and Behavior
- Keywords
- older investors, investment decision-making, investment skills, cognitive aging, investor experience, rules of thumb, investment knowledge, portfolio optimization, educational attainment, income, racial and ethnic minorities
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