Efficient Portfolios for Saving for College

8 Pages Posted: 1 Feb 1997

See all articles by Sherman D. Hanna

Sherman D. Hanna

Ohio State University (OSU)

Peng Chen

Ibbotson Associates

Multiple version iconThere are 2 versions of this paper

Abstract

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.

JEL Classification: G12

Suggested Citation

Hanna, Sherman D. and Chen, Peng, Efficient Portfolios for Saving for College. Available at SSRN: https://ssrn.com/abstract=1993 or http://dx.doi.org/10.2139/ssrn.1993

Sherman D. Hanna (Contact Author)

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

Peng Chen

Ibbotson Associates ( email )

225 North Michigan Avenue
Suite 700
Chicago, IL 60601
United States
(312) 616-1620 (Phone)
(312) 616-0404 (Fax)

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