Detailed Savings Plan Best Way To Reach Goals

Most Americans try to squirrel away for retirement. But what about saving for a new car, an ailing parent or the kids’ college education?

Without a detailed savings plan, many of those long-range goals can go unfulfilled, according to a study released this week by the Consumer Federation of America and NationsBank.

But the study also found those Americans who do operate under strict financial plans tend to save twice as much as those who don’t.

The survey of 1,770 American households found that 84 percent have savings. The number initially pleased researchers, said Diane Colasanto, president of Princeton Survey Research Associates, which conducted the study.

When they looked deeper, however, the savings landscape was far more bleak.

“Even after people had started to save for a goal, many savers’ habits were haphazard,” Colasanto said. They fail to earmark accounts, invest poorly or just save too little, she said.

The study found that 64 percent of working households have started retirement funds, about 56 percent are putting money away for children’s education and 51 percent have funds for major purchases.

Then the numbers dive: Only 34 percent are saving for new homes, and just 17 percent have money put aside to care for elderly parents.

With rigorous financial plans in place, the numbers improve. Regardless of how much people earned, the study found those with financial plans saved roughly twice as much as those without.

Analyst favors small stocks

Elaine Garzarelli, president of Garzarelli Capital, said she expects small-capitalization stocks to slightly outperform large-capitalization stocks.

The strategist said she considers the Dow Jones Industrial Average reaching 7,600 as “doable” and said she doesn’t expect the Federal Reserve to raise interest rates at its May 20th policy meeting.

Even though she said she generally favors smaller stocks, Garzarelli’s top three current recommendations are of large-capitalization stocks. She touted Dell Computer Corp., Compaq Computer Corp. and McDonald’s Corp., her “favorite stock.”

Garzarelli gained fame by forecasting the October 1987 stock market crash. Garzarelli’s record has since been tarnished by predictions that didn’t materialize.