||Due to the surging global stock market in the past few years, investors in Taiwan have been ignorant of the risk management. When the financial tsunami swept across the world, investors suffered tremendous financial losses; most of their life-long savings were serious shrinking. Consequently, the asset accumulation and asset allocation of personal life-cycle have become more important. The purpose of this study is explore the analysis of case study relating to the products of the US 401k project, focusing on life-cycle funds and the insurance companies’’ life cycle Hypothesis. In accordance with Behavioral Finance, we explain the investors’’ behaviors, including investment risks decision-making, psychological accounts, self-control, greed, fear, and psychological bias, etc.|
This paper will first describe operational methods of life-cycle funds, market conditions, and case-study analysis. In one case study shows that the risk to life is not considered, an example is that a fund company introduces the life-cyele target date fund. Another case study is to consider the risk to life, an example of an insurance company (hereinafter referred to as N insurance companies) to launch a variable life insurance policy based on the life-cycle Hypothesis. From the perspective of life-cycle Hypothesis and behavioral finance, we analyze and study the investment behavior of investors.
The findings of the research shows that after goals are set, through life-cycle funds, investors’’ funds are planned toward the target with fixed date and fixed amount in accordance with time, asset allocation will automatically be adjusted. Investors thus do not have to worry about any investments. Such an arrangement can therefore exempt investors from the problems, such as greed, short-slightness, self-control and others, enabling investors to reach financial goals at various stages.
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