Mountain Farmer Household Portfolio Choice Preference

Families play an indispensable role in the social and economic development. As the investors in the economic market, families have an absolute advantage in terms of capital investment, information collection and asset allocation. They make the choice of the portfolio from their own financial motives and feelings. The families with the same preference are bound to a specific group of investors. They led to the development of investment institutions, as well as adapt to or promote the evolution of the financial system. In order to promote the development of the financial economy, our research is necessary to go back to the original point that the participation of domestic investors and the analysis about the choice behavior of portfolio. The choices of the family portfolio are diverse and complex. Each family labor income is a non-trading assets and each family has the fixed assets such as housing. Different families have huge differences in portfolio selection. Many families don’t participate in the risk financial assets such as stock investment. Even if some families make the asset investment, the portfolio selection is vastly different.The object of this paper is the mountain farm family in underdeveloped areas in Guizhou. Firstly, we described the concept of rural households and portfolio to determine the scope and concept of the object of this paper. We made the literature review of the household portfolio and conclude that the influencing factors of the household portfolio were diverse. But the specific factors which affected the largest or the several factors on household portfolio which played a dominant role needed to be behind the study. Secondly, we summaried the theoretical basis for the portfolio which included western consumption-savings theory, Markowitz’s portfolio theory and life cycle theory. Those played an important role in the portfolio research. Then we used the data from the China’s household financial investigation report which was published by Southwestern University of Finance and Economics in2012. We elaborated the whole farm household’s assets structure and changes. Finally, according to the results of the questionnaire, we summaried the cross-sectional data about the rural households assets:the total assets, the total amount of physical assets, the total financial assets. When we conducted an empirical test, the factors which influenced financial assets were main. By using the stepwise deletion of selection in SPSS19.0software,we analysised the factors working on the total amount of the financial assets. We obtained these factors:household income, the total amount of physical assets, the level of education about the head of the household. The result showed that when the rural households got much more income, the expenditure surplus of the household income was more. So more and more people tended to savings or increase the accumulation of financial assets. With the growth of amount of physical assets, people had met the basical consumer demand, the remainder might be more incline to the accumulation of financial assets. But comparing with the impact of annual household income, the impact of physical assets on the growth of financial assets was weeker. The participation of stock market had an obvious effect on the total amount of financial assets. By participating in the stock market, the kinds of financial assets were increasing. So the ways to obtain profit increased. Then we used the factor to analyze the factors working on stock market. Income, physical assets, financial assets and the level of the education of the head in family had greater impact on the stock investment.After data analysis and empirical tests, we believed that:(1) The total amount of the assets in the rural households were upward. But the internal structure preached the situation which had the low proportion of financing assets and high proportion of physical assets. Bank deposits still accounted for the largest proportion. It had both positive and negative effects on the growth of China’s economic development and financial institutions. Real estate accounted for the largest proportion of the physical assets. That indicated China’s rural household tended to own private houses and the investment in physical assets was single.(2) The level of the income in rural household showed a positive correlation with the financial assets. The higher the income was, the greater the proportion of the financial assets was. Total financial assets had increased, but overall. The proportion of total household assets was still not high. Income, the total amount of physical assets and total financial assets had a positive effect on the equity investments. The same as the level of education of the head in the family. The expansion of family size had a negative impact on stock investment. That might be due to the number of family members. But in the rural household investment in financial assets, life cycle effect was not obvious.(3) In the portfolio of rural household, housing, bank deposits and cash assets was still the top three types of assets. Bonds,and futures were held by the least proportion; The families who held the large total assets tended to hold a higher proportion of risky assets.