Assets relative risk for long-term investors

The relative riskiness of equity compared to bonds and bills goes down when the investment horizon increases. Stakeholders in the savings industry should consider this fact for the sake of the consumers' welfare

Introduction

Different investors have different profiles, which suggests that optimal portfolio choices should be based on these underlying differences. Among the many investors' characteristics that should be taken into account, there is one of critical importance for which finance people and decision theorists have been debating for decades. Namely, it is often suggested that economic agents with a longer time horizon should invest more in stocks. Gollier (2007) provides an overview of this