Individual Consumption-Investment Decision Making Model Based on the Focus Points

In this paper we consider a single decision period consumption-investment problem with the consumption targets for an individual. The rate of return is uncertain and the portfolio preference order is influenced by the investor's social status, wealth, psychology and so on. We emphasize that the individual investor has one and only one chance to allocate the wealth into consumption and a portfolio for investment. In this case, we argue the investor will make decision based on particular scenario which she/he focuses on. The chosen scenario is called a focus point of the consumption-investment strategy. We propose new decision-making model for consumption-investment problem. Based on the new model we discuss the relationships between consumption targets and consumption-investment behavior.