CEF.UP – FIN Seminar/Webinar

Thursday – May 16^th, 2024 at 1:00 p.m. | Room 305| Online

“Invest as for Your Kids: Performance and Implications of Children’s Investment Accounts on Portfolios in Adulthood“

Jarkko Peltomaki– Stockholm University (Sweden)

Abstract:

“We explore the performance of custodial investment accounts for children and their implications on portfolios in adulthood. We find that children’s accounts, often resembling passive investment strategies, yield annual returns three times higher with lower volatility compared to adults’ accounts. Parental risk-taking behavior does not significantly differ for kids of different genders during early childhood. However, a notable shift occurs once boys enter their teenage years, as their accounts begin to mirror the investment patterns typically associated with adult men. Consequently, during this phase, boys’ accounts tend to underperform relative to those of girls. Furthermore, we document that individuals whose investment accounts were initiated by their parents during childhood consistently demonstrate superior performance as young adults compared to peers who opened accounts themselves. Moreover, they exhibit a narrowed gap in risk-taking behavior observed between men and women. These findings emphasize the importance of passive investment strategies and highlight the influential role parental interventions play in shaping investment attitudes.”