A national survey of 401(k) plan participants reported that they expect 6% returns from the stock market investments in the near term. The survey of 500 adults was conducted in November 2001 for The Vanguard Group.

Though this was the first national survey to report single-digit return expectations, they remain optimistic. Long term, participants believe stocks will provide a median return of 15% over the next 20 years. However, the survey results conceal somewhat just how wide ranging 401(k) plan participants’ expectations are. Just over half anticipate long-term annual gains of 10% for stocks; nearly 25% expect annual gains of between 30% and 100%, and the rest can’t come up with any estimate at all.

With such a wide range of anticipated returns, F. William McNabb, managing director, Vanguard Institutional Investor Group, said that the quality of investment education programs needed to be looked at closely. "One-half of the participant population has been the beneficiary of ongoing education efforts by plan providers and sponsors, and so has realistic expectations. But for the other half of the population, sponsors and providers need to redouble their efforts and target education programs at two types of participants--very inexperienced investors and those with extremely optimistic views about the future," he said in a statement.

 

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