Hanna, S. & Chen, P. (1996). Efficient portfolios for saving for college,
Financial Counseling and Planning, 7, 115-122.
This article uses 69 years of real rates of return for six types of
financial assets to find efficient portfolios for saving for college, in
terms of mean and minimum accumulations. Small stocks are in every efficient
portfolio. For 10 and 15 year time frames, the portfolio that was the safest
consisted of 89% intermediate term government bonds and 11% small stocks.
A family willing to stay 100% invested in small stock mutual funds until
each year’s college costs must be met can greatly reduce the burden of saving
for college, at relatively low risk.
KEY WORDS: college, investing, household portfolios, financial assets
Peng Chang, Ph.D. candidate, Consumer Sciences Department,
The Ohio State University, 1787 Neil Ave., Columbus, OH 43210-1295. Phone:
(614) 292-4389. Fax: (614) 292-7536. E-mail: firstname.lastname@example.org
The version of this article presented at the 1995 AFCPE meeting received
an Article of Excellence award from the Certified Financial
Planner Board of Standards in 1996.
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