While almost 70% of participants in 401(k) plans consider themselves more savvy investors than they were in 1994, their investment knowledge and savings habits still are at '94 levels, according to the fourth annual survey of defined contribution plan participants conducted by the Gallup Organization for John Hancock Financial Services.
According to the survey, released earlier this year, 69% of respondents believe they are more knowledgeable investors, up from 59% in Hancock's 1993 survey. Yet:
More than one-third of respondents asserted it is impossible to lose money in a bond fund, while 12% said it is impossible or didn't know if it is possible to lose money in a stock fund.
Nearly nine in 10 respondents didn't know money market funds are backed only by short-term securities. Eighty-seven percent believe the funds are backed by some combination of stocks, bonds and short-term securities or didn't know what backed them.
Respondents, on average, thought company stock funds are less risky than diversified stock funds.
Participants were more comfortable in 1995 that they will be financially secure in retirement. Nearly 40% of the 803 participants surveyed were not concerned about accumulating adequate savings for retirement, despite a general absence of savings outside company-sponsored plans and fairly low contribution levels within their qualified plans.