Study On Consumption And Portfolio Choice Over The Life Cycle Of Household

For the past fifteen years, Chinese families begin to participate in the financial market activities. Household assets investing allocation has changed, as the percentage of direct or indirect investments in the capital market such as family security accounts and pension accounts increased, and the family’s assets have diversified. As the basic unit of social and economic system, the family’s investment decision-making behavior also determines the level of economic development and the flow efficiency of social resources. So family’s rational investment behavior will directly affect the supply and demand structure of the market, and further promote financial market development and innovation. Therefore, under the background of China’s continuing to deepen reform and promoting economic restructuring, reasonable investment behavior within the family life cycle becomes increasingly important.This study fully considers the Chinese characters of the family lifecycle, using the CRRA utility function to construct the lifecycle model based on the combination of consumption and financial assets investment during Chinese family lifecycle. What’s more, this thesis also analyzed how the changes in the parameters affect the behavior of the portfolio choice of chinese family and further got the Extrusion effect of the labor income risk elements and cost of raising children during the initial stage of the families on the families’ risk investment. This thesis studied the household consumption and investment decision and we hope that this will be of theoretical reference for the investment decisions of household financial assets.