Chapter 7: Life Cycle PlanningThis chapter addresses three questions from the point of view of an expected utility maximizer and a behavioural investor:
1. What is the consumption/saving path along the life cycle?
2. What is the best proportion of risky assets to financial capital over the life cycle?
3. Does it make sense to lock the investor into a life cycle product?
The chapter is structured as follows.
7.1. Case study: Widdow Kassel
7.2. Main decisions over time
7.3. Consumption smoothing
7.4. The life cycle hypothesis
7.5. The behavioural life cycle hypothesis
7.6. The life cycle asset allocation problem
7.7. The life cycle asset allocation of an expected utility maximizer
7.8. The life cycle asset allocation of a behavioural investor
7.9. Life cycle funds