America's Research Group

NEW YORK--(BUSINESS WIRE)--Feb. 10, 1998--The typical American makes investment decisions based on information and tips picked up from family and friends rather than readily available information sources like stockbrokers, newspapers and investor newsletters, according to a recent national survey of 1000 small U.S. investors.

"It's the small investor seeking assurance from those he knows best and trusts most," said Britt Beemer, Chairman of America's Research Group, which produced the NBR/Bridge poll.

"Not only that," he added, "but one out of five respondents (19.70 percent) said they consulted friends and relatives as often as once a month."

Those polled in the survey had to have at least $5000 invested, but the average amount for each of the 1000 investors who participated averaged between $26,000 and $28,000," Beemer said.

When asked what influences them most in setting or changing their investment strategies, more than one half the audience said their personal situation was the key reason, compared with 16.3 percent basing such decisions on market performance and another 12.1 percent on interest rates.

There was strong agreement from respondents on why they are investing, according to Beemer.

"Three out of four (74.7 percent) agree that the main purpose is to have a fund to cover retirement needs, while 13.5 percent say the primary reason is to pay for a child's education, and another 8.7 percent report they are setting it aside to cover a major purchase.

Most investors have unusually high expectations for the return on their investments, Beemer reported.

"Nearly 44 percent of the investing public is assuming a return of 15 to 20 percent, with another 17 percent of the public expecting at least 10 percent profit," he said.

"That's because the public sees so many advertisements showing 38-40 percent returns that they feel comfortable with a number just about half that large.

"When asked about the minimum return they would accept from investments, nearly one in four Americans (23.8 percent) said 10 percent, with one in three (33.2 percent) reducing that level of acceptance to 7 or 8 percent.

Investors are also concerned how the situation in Asia may affect their holdings, but most (61.5 percent) have not made changes in their portfolios against only 14.0 percent reporting they had.

At the same time, nearly half of American investors (49.8 percent) said that the Asian financial problems could negatively affect the U.S. Stock Market compared with slightly more than one in three (34.7 percent) who disagreed.

"What's surprising," said Beemer, "was that nearly 7 of 10 Americans said they didn't expect to make changes in their portfolios even if conditions in Asia should continue.

"Nearly twice as many respondents said their investment strategy was conservative (34.6 percent) rather than aggressive (18.0 percent) and more than 4 out of 10 (40.9 percent) reported they intended to increase their investing this year.

But far fewer women (12.0 percent) than men (21.2 percent) said their investment strategy was aggressive, and women underscored their more conservative position when 36.1 percent said they planned to increase investing this year compared with 43.5 percent of male investors.

Primary types of investments were 401K plans (26.1 percent), mutual funds (9.7 percent), and "a little of everything" (11.2 percent).

Nearly twice as many Americans (42.4 percent) said they were more confident about the economy than less (22.8 percent), and seven times as many respondents (72.1 percent) said they were saving more than they did five years ago compared with only 10.1 percent who said they were saving less.

The research was conducted by telephone Jan. 23-28, 1998. It has a margin of error of +/- 4.3 percent.

Britt Beemer founded America's Research Group in 1979. His research clients, many of the leading corporations of America, include J.C. Penney, Eckerd Drugs, Sealy Mattress, and the accounting firm of Ernst & Young. Beemer is the author of Predatory Marketing, published in hardcover last year by William Morrow & Co., and just out in paperback from Broadway Books. The book provides insight into his 19-year record of helping companies gain market share.

CONTACT: America's Research Group, Charleston

Britt Beemer/Chris Cooper, 800/723-3253 or Norman Weissman, 212/508-3400

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