Yao, Rui conference presentations (MU)
https://hdl.handle.net/10355/62715
2024-03-29T15:20:14ZBehavior perspectives on making investment mistakes
https://hdl.handle.net/10355/62717
Behavior perspectives on making investment mistakes
Lei, Shan; Yao, Rui
Abstract only. Abstract: Classic economics theory assumes individual are completely informed and rational when making decisions. However, in reality, decision makers go through both a rational and an emotional process in their brain. In some situations, emotional elements dominate the decision-making process (Ozmete & Hira, 2011; Tilson, 2005). Emotionally driven investment behaviors could lead to unnecessary realization of financial losses, which can impede investors' ability to accumulate wealth and jeopardize their financial goal achievement. Understanding factors that affect investors' decision-making is the first step into the solution to help investors overcome behavior biases and avoid investment mistakes. Using data from the 2008 FPA-Ameriprise Financial Value of Financial Planning Research Study, this study identifies the factors related to making investment mistakes. Investment mistakes in this study refers to moving assets into more of a cash position in a down market while having an adequate level of and reported an understanding of financial risks are more likely to make such investment mistakes. These findings have important implications for investors, their financial advisors and financial planning professionals in general.
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2015-01-01T00:00:00ZBuying high? : The house money effect on DC plan stock investment
https://hdl.handle.net/10355/62718
Buying high? : The house money effect on DC plan stock investment
Yao, Rui; Lei, Shan
Abstract only. As more and more employees are eligible for defined contribution (DC) plans as versus defined benefit (DB) plans, they have to shoulder the responsibility to manage their plan assets in order to achieve the desired consumption during retirement. With the well-known projections of the Social Security program and the longevity expectation of individuals, the retirement financial outlook for today's workforce is a concern. Portfolio allocation affects retirement wealth (Papke, 2004). When making portfolio allocation decisions, investors should focus on factors such as financial goals, risk and return of the portfolio, risk tolerance and investment horizon. "Buy low and sell high" is a simple concept. However, prior literature documented behaviors in ways contrary to this concept (Ciccone, 2011; Yao et al., 2013). Although several empirical studies have noted the effects of prior investment outcomes on investors' portfolio allocation decisions, very few studies focused on the influence of prior investment outcome on stock allocations in DC plans. Using the 2001-2013 Survey of Consumer Finances (SCF) datasets, this study fills in this research gap and examines how prior investment experience affects stock allocation in DC plans. Results show that compared with households with a prior loss and a non-positive economic expectation, those who had a prior gain were 1.9 times as likely to invest all DC plan assets in stocks. This confirmed the house money effect on stock investment in DC plans. This may help explain why some investors tend to "buy high" as opposed to following the simple "buy low and sell high" concept. Financial educators and financial fiduciaries should develop investment mechanisms and financial products to help investors avoid making investment mistakes and accumulate adequate retirement wealth.
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2016-01-01T00:00:00ZDebt holding and burden by family structure : patterns and trends in 1989-2007
https://hdl.handle.net/10355/62719
Debt holding and burden by family structure : patterns and trends in 1989-2007
Xiao, Jing Jian; Yao, Rui
Abstract only. Abstract: Financial deregulation started in the 1980s provided families both economic opportunities and risks. Rapidly increased mortgage, credit card and other debts are out of control among many families that arguably caused the recent great recession. The purpose of this study is to describe patterns and trends of debts held by American families with data from 1989-2007 Surveys of Consumer Finances. Eight family structure types were formed in terms of marital status, gender, and child status. Holding patterns and trends of five types of debts (mortgage, credit card, vehicle, education, and purchase loan) and two debt burden measures were examined. For all family types, the holding rate of credit card debt increased but that of the purchase loan decreased in the last two decades. Compared with the average, married with children families were more likely to hold mortgage, credit card, and vehicle loans. In terms of debt burdens, cohabiting couples with children and single mothers had the highest rate of the heavy debt to income ratio (over 40%) and of debt delinquency.
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2011-01-01T00:00:00ZDefined contribution plan deferral : what are participants doing?
https://hdl.handle.net/10355/62720
Defined contribution plan deferral : what are participants doing?
Yao, Rui; Ying, Jie; Micheas, Lada
Abstract only. Abstract: Using the 2004, 2007 and 2010 Survey of Consumer Finances, this study examines the trend of defined contribution (DC) retirement plan deferral over time. "Buy low and sell high" is an incredibly simple idea. Unfortunately, findings suggest that DC deferral behavior deviates from this principle. Future research is needed to explore reasons for such behavior and provide methods and policies to compensate for this less-than-optimal behavior. Researchers, employers, financial educators and financial practitioners should help the current workforce better understand the behavioral challenges they face and make better decisions for retirement savings.
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2013-01-01T00:00:00Z