AEGON Finds Parents Expect 24% Average Annual Returns On College Savings

NU Online News Service, Aug. 28, 1:55 p.m. – U.S. parents want sky-high returns when they save to send their children to college, but they have little tolerance for risk, according to a new survey from Yankelovich Partners/Harris Interactive, Norwalk, Conn.

Yankelovich interviewed 510 parents with children under 18 between April 15 and May 15 for AEGON Institutional Markets Inc., Louisville, Ky., a unit of AEGON N.V., The Hague, The Netherlands.

Researchers found that parents had been spoiled by the stupendous stock market results for the late 1990s: they said they expected an average annual return of 24%, even though they had averaged a return of only 11% in 2000, and the average annual return is well under 10%.

But the researchers also found that parents had little understanding of the concept that the market tends to reward investors who take bigger risks with bigger rewards. Eighty-five percent of the parents interviewed said they would never do anything to gamble with their principal, 57% worry about the effects of fluctuations in the stock market, and 61% classify themselves as “conservative” investors.

Two-thirds of the parents told researchers they had started saving for their children’s education, and 40% said they saved regularly. The parents who said they saved regularly said they put aside an average of more than $2,500 a year per child.