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Troubled Finances of the Young and Restless
Tweet Share on Facebook September 4, 2008 Comment (6)Generations X and Y will represent 60 percent of the U.S. workforce by 2010. When it comes to money, a recent Fidelity survey found, both generations are—surprise!—conflicted. To me, it's interesting that Fido's definition of a gen X-er is someone born between 1967 and 1975; gen Y includes anyone born between 1976 and 1987. That means I hail from generation Y—yikes.
Here are a few take-aways from Fidelity's survey:
Money keeps us up at night. Nearly 8 out of 10 respondents said money is their biggest concern. It ranks higher than both family relationships and healthcare.
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Don’t Bet the Farm on Company Stock
Tweet Share on Facebook September 4, 2008 CommentWe all know better than to put a big chunk of our money in company stock, right? Wrong. After discovering that many employees had more than 20 percent of their 401(k) balances in its company stock plan, Washington Mutual is shaking things up. As of October 1, participants can't allocate more than 20 percent of their future salary contributions to the company stock fund, reports the Seattle Post-Intelligencer:
The memo notes that "several Fortune 500 companies believe that putting a cap on the amount of company stock in one's 401(k) is a smart way to reduce investment risk, and we have concluded likewise." One hopes WaMu employees came to that conclusion somewhat earlier, for the sake of their retirement accounts. WaMu's stock closed Friday at $4.05 a share, after posting a close as low as $3.23 in July. A year ago, WaMu was trading at $36.64 a share.
Nationwide, 36 percent of employees with 401(k)'s that offer company stock have more than 20 percent of their savings in company shares, according to a Financial Engines analysis. The stats for older workers are even more troubling: A quarter of plan participants over age 60 had at least half of their 401(k) in company stock. According to one retirement researcher (via USA Today), workers shouldn't put more than 10 percent of their savings in any single company stock—including their employer's.
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A New Book From the Bogleheads
Tweet Share on Facebook September 3, 2008 Comment (1)In 2006 came The Bogleheads’ Guide to Investing.
Now, the online index-investing community has another book in the works. Tentative title: The Bogleheads’ Guide to Retirement Planning.
In a recent announcement on the Bogleheads’ website, Mel Lindauer, one of the forum’s leaders, said the book would be “a Bogleheads community project with many of you helping to write different chapters.” That could involve input from a lot of members--in the neighborhood of 10,000--reports IndexUniverse.
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Why ETFs Could Overtake Old-School Mutual Funds
Tweet Share on Facebook September 3, 2008 CommentJim Wiandt of IndexUniverse has come right out and said it: Exchange-traded funds will surpass traditional mutual funds. How and why? As he explains it:
Arguably still just a blip on the radar with only 1 in 20 mutual fund dollars, ETFs have now woken up the major players by taking often tremendous shares of the new flow coming into the market. And they've done this while attracting many investors who don't fall into the category of old-school index investor.
There are tremendous obstacles still in the way of ETFs getting into some of the biggest (retirement) asset pools, but you can begin to feel a real push in that direction. And year-over-year, the taxable money is increasingly going into ETFs, and there's now universal recognition, at least, of ETFs by financial advisors. Add to all of that the fact that ETFs just are a better mousetrap in terms of cost and trading efficiency (all the more so for active funds, though some argue otherwise).
Have you been won over by ETFs? Check out these picks for new investors.
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New Fund to Invest in Madonna's Bra, Lennon's Bathrobe
Tweet Share on Facebook September 2, 2008 Comment (1)Would you bet money on the rising value of Madonna mementos? Marquee Capital, a celebrity collectors firm based in London, thinks you might. Marquee has an investment fund in the works that will be devoted to rock and pop memorabilia from stars including Madonna, Marilyn Monroe, and John Lennon, reports the Telegraph.
Among Marquee's Madonna goods are the pink satin strapless dress she wore in the 1985 video for "Material Girl" and the black satin bustier she wore in 1986's "Open Your Heart" video. (My question: Where's that snappy outfit from "Papa Don't Preach"?) A more bizarre "asset" of Marquee's is a signed American Express card Madonna used from 1985 to 1987. The relatively slim portfolio of Lennon memorabilia includes a multicolored bathrobe, a pair of jeans, and a beige corduroy jacket (all owned and worn).
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