The Research On Household Financial Portfolio Decision-Making System

Research on household financial portfolio decision-making is always a hot issue in the economics and finance research field. This paper concluded the factors which impact household financial portfolio decision-making, and established a dynamic structure and analyze feedback mechanism, finally to study the quantitative characters of mechanism in which endogenous variables impact asset allocation using quantitative techniques.This paper summarized the main factors which impact the decision-making by the qualitative analysis.The results shows that wealth, risk aversion, household consumtion tendency education, transaction costs and the efficiency of financial intermediation effected the asset allocation decision.It developed a kind of method which built complex system whole structure, and then established a dynamic structure by this method. The result is that wealth and portfolio share of risky asset form positive feedback loop; consumption growth during expected time until retirement restraints wealth accumulation, which will reduce the portfolio share of risky asset; income growth during expected time until retirement promotes wealth, which will enhance the portfolio share; dynamic structure come inte balance through the target wealth to income ratio.At last, the paper had come up with the optimal percentage portfolio share of risky asset, target wealth to income ratio and consumption to income ratio with adopting the optimal consumption and portfolio model by handling computer simulation technology, with quoting Viceria's optimal consumption and portfolio model. Then it examined the effect of expected time until retirement, coefficient of relative risk aversion on the above three ratios, in the process finding out the simulation results being consistent with theory expectation and reality in general.