Retirement Planning
On the subject of investments towards retirement, one should always look with suspicion towards the source of advice. Needless to say Wall St. has an interest in engaging people in making investments -- there are fees and all sorts of spillover benefits for those on the street to be had when the market is active -- "churning" they call it.
Further, even well-intentioned, self-interested 'experts' have a terrible record for getting it wrong. My father went into Wall St. as a broker and investment counselor following upon his WW1 military service. I well recall him noting that he had seen the crash coming, gotten all his clients out of the market, put aside enough monies to live with my mother in northern Vermont for a year until things blew over. They did not -- the Great Depression endured until well into WW2 when finally our war production restored employment and for a time after WW2 with the European and Japanese factories destroyed, we had an edge that produced our post-war "peace and prosperity" (Ike's campaign slogan). Unfortunately we slid along without upgrading our production equipment (particularly in steel) and suddenly found ourselves at a competitive disadvantage against the formerly destroyed manufacturing competitors who did modernize their plants rather than grabbing short-term profits.
Back to my father. One of his clients was the leading academic market expert at Yale. My father had been given half of his stock portfolio to manage. My father's half was rescued by his selling as noted above, but the other manager had stayed in and had wiped out even the monies that my father had rescued.
The bottom line Bush move in prospect looks to be to persuade those under 40 that they can enhance their retirements by having a portion of their Social Security taxes converted to individual investment accounts. There is no formula yet, but manifestly this 'you can win the lottery approach' may be instituted in one form or another at a tremendous cost to someone -- probably future generations. It has been tried before -- in Chile and in Britain. In the former the government is now having to rescue those who struck out and in Britain where Thatcher did her thing, they eventually had to pass legislation _limiting_ the take in broker fees to 20% of the value of the investments. The obvious end result is that brokers will make out like bandits with such a scheme and the rest of us will pay the damage -- or more accurately the 40 and unders will be stuck with the bill.
Sadly I have watched some of my Yale classmates now retired bemoaning the fact that they blew it with the 401(k)s by sticking with the market when it dive bombed in 2000. How sad to be stuck at the end of a lifetime this way. One has to be both savvy AND lucky to survive in such gambling games -- and that is what the stock market is. The only ones sure to profit are those pulling in fees -- not those hoping to get rick quick.
Better to find out how to hook up with TIAA or some other dependable independent pension fund that offers 'no fee' change of holdings with flexibility along the way so that one can move towards more conservative options when one nears retirement: http://www.tiaa-crefinstitute.org/
--
"A war is just if there is no alternative, and the resort
to arms is legitimate if they represent your last hope." (Livy)
--
Ed Kent 718-951-5324 (voice mail only) [blind copies]
http://groups.yahoo.com/group/CollegeConversation
http://groups.yahoo.com/group/PeaceEfforts
http://groups.yahoo.com/group/EndingPoverty
http://groups.yahoo.com/group/440neighborhood
http://groups.yahoo.com/group/StudentConcerns
http://BlogByEdKent.blogspot.com/
Further, even well-intentioned, self-interested 'experts' have a terrible record for getting it wrong. My father went into Wall St. as a broker and investment counselor following upon his WW1 military service. I well recall him noting that he had seen the crash coming, gotten all his clients out of the market, put aside enough monies to live with my mother in northern Vermont for a year until things blew over. They did not -- the Great Depression endured until well into WW2 when finally our war production restored employment and for a time after WW2 with the European and Japanese factories destroyed, we had an edge that produced our post-war "peace and prosperity" (Ike's campaign slogan). Unfortunately we slid along without upgrading our production equipment (particularly in steel) and suddenly found ourselves at a competitive disadvantage against the formerly destroyed manufacturing competitors who did modernize their plants rather than grabbing short-term profits.
Back to my father. One of his clients was the leading academic market expert at Yale. My father had been given half of his stock portfolio to manage. My father's half was rescued by his selling as noted above, but the other manager had stayed in and had wiped out even the monies that my father had rescued.
The bottom line Bush move in prospect looks to be to persuade those under 40 that they can enhance their retirements by having a portion of their Social Security taxes converted to individual investment accounts. There is no formula yet, but manifestly this 'you can win the lottery approach' may be instituted in one form or another at a tremendous cost to someone -- probably future generations. It has been tried before -- in Chile and in Britain. In the former the government is now having to rescue those who struck out and in Britain where Thatcher did her thing, they eventually had to pass legislation _limiting_ the take in broker fees to 20% of the value of the investments. The obvious end result is that brokers will make out like bandits with such a scheme and the rest of us will pay the damage -- or more accurately the 40 and unders will be stuck with the bill.
Sadly I have watched some of my Yale classmates now retired bemoaning the fact that they blew it with the 401(k)s by sticking with the market when it dive bombed in 2000. How sad to be stuck at the end of a lifetime this way. One has to be both savvy AND lucky to survive in such gambling games -- and that is what the stock market is. The only ones sure to profit are those pulling in fees -- not those hoping to get rick quick.
Better to find out how to hook up with TIAA or some other dependable independent pension fund that offers 'no fee' change of holdings with flexibility along the way so that one can move towards more conservative options when one nears retirement: http://www.tiaa-crefinstitute.org/
--
"A war is just if there is no alternative, and the resort
to arms is legitimate if they represent your last hope." (Livy)
--
Ed Kent 718-951-5324 (voice mail only) [blind copies]
http://groups.yahoo.com/group/CollegeConversation
http://groups.yahoo.com/group/PeaceEfforts
http://groups.yahoo.com/group/EndingPoverty
http://groups.yahoo.com/group/440neighborhood
http://groups.yahoo.com/group/StudentConcerns
http://BlogByEdKent.blogspot.com/
posted by Ed Kent at 9:44 AM
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