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Household Ratio Guidelines for the Amount of Investments
Keywords: 5 words maximum
capital accumulation ratio, financial ratios, investing, Survey of Consumer Sciences
Very short description for use in the program to help attendees understand more than a title can describe
Some textbooks suggest the use of financial ratios to provide indicators of whether households are making appropriate decisions. Ratios related to the level of investment assets are not standardized. We investigated three investment ratios mentioned in textbooks: the capital accumulation ratio, the ratio of investments to annual income, and the ratio of investments to total assets. We conducted a regression on respondent evaluation of the adequacy of retirement income. The ratio of investments to total assets had the strongest relationship to subjective retirement adequacy, controlling for age, homeownership status, and whether the household had a defined benefit pension plan.
Lead & Corresponding Author
Sherman Hanna, Ph.D., Ohio State University
Job Title
Professor
Additional Authors
Kyoung Tae Kim, PhD, The University of Alabama
Job Title
Assistant Professor