NU Retirees: For over a year, the interest rate for the Fixed Account in the 401(k) plan at Fidelity has been declining. The decline has continued into 2015 with the rate reducing from 2.25% to 2.0%. As we have mentioned in the past, we now view the fixed account as a proxy for cash.
We’ve written a lot over the past year about how to view cash in your portfolio – posts can be viewed here.
The following story offers a great example of what can go wrong when a young, financially inexperienced individual becomes wealthy overnight. This author’s advice at the end is exactly what we recommend to clients in this situation:
In a recent Gallup poll, Americans were asked what they thoughts was the best investment to make over the long term. Their choices:
Real estate
Gold
Stocks
Savings Accounts
Bonds
The average American incorrectly believes that Real Estate is the best investment over the long term.
The following article presents a good argument for why Stocks may be the best investment over the long term. And I’m glad that they made note that investors should be shifting to lower risk assets the closer they get to retiring.
Less Than a Quarter of Americans Get the Most Important Investment Right
Children are looking to their grandparents for advice about saving money, according to a new study by TIAA-CREF and MIT’s AgeLab.
85% of the children interviewed were interested in talking more about money, saving and personal finance. Yet, only 8% of grandparents have such conversations.
The article in USA Today, outlined a few good ways to jumpstart the conversation:
A Roth IRA does more for your teenager than help them realize the importance of saving for retirement. It could give them a great boost, too! Consider the recent article from the New York Times.
Is this the top of the market? If so, are you (and your investments) ready for the possible roller coaster that could follow?
That’s the gist of a recent WSJ article, and it’s not bad advice to consider.
Investor’s appetite for risk is constantly changing. When the market is bullish (like it is right now) investors want to maximize their returns and are willing to take on more risk. Yet, as soon as the market turns sour, investors want to limit their risk and move to something “safer”.
That knee-jerk reaction can often end up hurting the investor in the long run. They end up buy and selling at the wrong time.
It’s better to take time now for investors to imagine how they would feel if there was a 5% or 10% drop in the market. Would they stay calm and stay the course or would they be looking to move to more conservative investments?
If you haven’t thought about that, take some time now to consider what you would do.
Of course, we can help guide you.