Asset Allocation with the Inclusion of the Owner-Occupied Home

Asset Allocation with the Inclusion of the Owner-Occupied Home

Bibliographic Details
Main Author: Niro, Michael M.
Language:English
Published: Cleveland State University / OhioLINK 2010
Subjects:
Finance
Asset Allocation
Diversification
Real Estate
Investments
Portfolio Theory
Housing
Mutual Funds
Wealth
Taxes
Online Access:http://rave.ohiolink.edu/etdc/view?acc_num=csu1272472692
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spelling ndltd-OhioLink-oai-etd.ohiolink.edu-csu12724726922021-08-03T05:35:01Z Asset Allocation with the Inclusion of the Owner-Occupied Home Niro, Michael M. Finance Asset Allocation Diversification Real Estate Investments Portfolio Theory Housing Mutual Funds Wealth Taxes <p>For at least the last six decades optimal portfolio selection has been one of the main focuses of financial research. Since Markowitz (1952) many authors have developed ideas about the optimal allocation of assets that have reached today's mainstream portfolio decision-making. However, many of them miss the single largest investment most people make in their lifetime, their home. Therefore, this research seeks to analyze the impact of the owner-occupied home on the portfolio in order to determine its optimal allocation. The motivation for this analysis is derived from the individual investor who spends a lifetime saving in order to maximize their long-term wealth. The advantage of this study over previous research is the use of directly available assets through the use of Vanguard Funds. By using this dataset, three goals are achieved: (1) investing over the largest set of asset classes included in the research to date, (2) minimizing the cost of investing for the portfolio owner, and (3) providing a source of investable assets that are available to the small investor.</p><p>The results have a substantial impact on the wealth accumulation of owner-occupier investors. First, the results show that including unleveraged owner-occupied housing in the portfolio is beneficial only at low levels of portfolio risk. Second, the results show that including leveraged owner-occupied housing in the portfolio is beneficial across all levels of portfolio risk. At low levels of portfolio risk all of the MSAs have some allocation to leveraged owner-occupied housing, however this allocation changes as the Loan-to-Value (LTV) Ratio increases. However, regardless of the LTV ratio, risk reduction at the lowest portfolio risk level is visible, but less so as the LTV ratio increases. Third, investors looking to allocate their investable funds across their portfolio without adding the mortgage will be over-investing in leveraged housing and potentially taking on too much unsystematic risk for the level of return received. Fourth, higher tax bracket investors have greater allocation to leveraged owner-occupied housing than lower tax bracket investors and achieve higher rates of return in comparison to the same Tax Bracket Renter Portfolio.</p> 2010-04-29 English text Cleveland State University / OhioLINK http://rave.ohiolink.edu/etdc/view?acc_num=csu1272472692 http://rave.ohiolink.edu/etdc/view?acc_num=csu1272472692 unrestricted This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws.
collection NDLTD
language English
sources NDLTD
topic Finance
Asset Allocation
Diversification
Real Estate
Investments
Portfolio Theory
Housing
Mutual Funds
Wealth
Taxes
spellingShingle Finance
Asset Allocation
Diversification
Real Estate
Investments
Portfolio Theory
Housing
Mutual Funds
Wealth
Taxes
Niro, Michael M.
Asset Allocation with the Inclusion of the Owner-Occupied Home
author Niro, Michael M.
author_facet Niro, Michael M.
author_sort Niro, Michael M.
title Asset Allocation with the Inclusion of the Owner-Occupied Home
title_short Asset Allocation with the Inclusion of the Owner-Occupied Home
title_full Asset Allocation with the Inclusion of the Owner-Occupied Home
title_fullStr Asset Allocation with the Inclusion of the Owner-Occupied Home
title_full_unstemmed Asset Allocation with the Inclusion of the Owner-Occupied Home
title_sort asset allocation with the inclusion of the owner-occupied home
publisher Cleveland State University / OhioLINK
publishDate 2010
url http://rave.ohiolink.edu/etdc/view?acc_num=csu1272472692
work_keys_str_mv AT niromichaelm assetallocationwiththeinclusionoftheowneroccupiedhome
_version_ 1719422082177040384

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