IRA Holding Allocations: Do Demographics Matter?
A recent study by the Employee Benefits Research Institute indicates that older investors and investors where the source of funds were rollovers as opposed to initial investments had the lowest proportion of equity (versus debt, balanced or annuity) holdings (one exception: young investors with small balances tended to have the lowest equity percentage). Balanced funds were particularly valued by investors 45 or younger while Roth IRA investors had the highest proportion of equity investment. There was little difference in male and female investors.
These findings are not terribly surprising. Young investors might be cautious when first investing, but would soon realize that equity investments give themselves the best protection against future inflation. Older investors, expecting a shorter life horizon, would be more likely to be cautious. Roth investors would tend to be well off and willing to take some risks to grow wealth and women generally have significantly increased in investing savvy over the last 20-30 years.