Skip to main content
Home Working together to build your tomorrow

Plenty of pitfalls awaiting state’s noble savings plan

In Great Britain, standard nomenclature for describing retirement plans is to refer to them as pension “schemes.”  The word “scheme” in the British context is in no way derogatory and conveys no sense of skullduggery the way it does in this country.

A new California law intended to increase employees’ voluntary retirement savings sounds good on paper, but the success of the state-run “Secure Choice” program will hinge on practical reality -- or rather, “the devil will be in the details.”

Real estate investing is seductive, but beware

When I taught skiing at Sugar Bowl in the late 1960s, the director was Alex Brogel, who had been a teenager in Germany during World War II.

Pressed into service as a bulldozer driver who worked to build Hitler's mountain retreat in Berchtesgaden, he had personal interaction with the detail-oriented Fuhrer himself, whom Brogel described as being "actually a pretty nice guy ... just a little crazy."

Candidates differ on where to find money for goals

What passes for daytime TV during my vacation is the broadband access to this summer’s political theater. I can’t recall being this riveted to the action since the summer of the Watergate hearings. Setting aside the sheer entertainment, I’m trying to gain a grasp of how these competing factions (whichever one wins) will impact the challenges of those of us still building nest eggs, or already spending them, in retirement.

The Federal Reserve

With vacation time hanging heavy on my hands here on Isle au Haut off the coast of Maine, the solitude invited a plunge into the new book by Mohamed A. El-Erian. Mr. El-Erian, was the CEO of PIMCO, the bond trading behemoth, to list just one of his major accomplishments. His book is “The Only Game in Town --- Central Banks, Instability, and Avoiding the Next Collapse.” To this I add, “Oh, my!”

Bond yield curve can predict future

Bond interest rates serve as tea leaves for economists attempting to read into them a hint of future economic conditions. Generally speaking, low long-term interest rates indicate that the economy will be growing slowly and that nobody expects an economic boom anytime soon. The most perilous words for an investor to utter are: “this time it’s different.” Usually it’s not. Economic cycles just repeat themselves over the years in predictable ways.

Learning to avoid investing mistakes

Considering the fact that I will have written this weekly column for 17 years as of October, it is entertaining (for me, anyway) to sift through a raft of old material to see how much has changed. An October 22nd, 1999 column on Behavioral Economics talked about the relatively new science of understanding how people make financial decisions. To a large extent, we are our own worst enemies, and recognizing this fact has prompted the financial services industry to offer a variety of tools to help combat what is called “the status quo bias.”

Federal budget cuts often 'indirect taxes

For some people, it would appear that the only good government is no government. TSA airport screeners offer one of the purest in-your-face examples of cutting back a government service just as demand increases by 15 percent. The answer is long lines and frustrated passengers who are now being “taxed” by the value of their time spent in line and at the cost of missing flights. It’s the last thing anyone needs considering how little it costs per head to do it right.

Coal industry offers retirement saving lesson

<p>A television newscast recently recounted the conditions in Gillette, Wyoming which has been hit by the decline in the coal industry. The story centered on residents who had been laid off by the mining company that owned and operated the huge open pit mines in the area. It’s an industry that always fascinated me because of the scale of the equipment. A former neighbor who was an ace mechanic was on call 24 hours a day to be flown around the western coal-producing states.

Bonds drag down target-date funds

I experienced “sticker shock” this year when I reserved a car to use in Maine for my summer vacation. The cost for the exact same car I have rented in previous years was exactly 50 percent higher than last year. Checking with other rental companies left me equally stunned.

So inflation, whether prompted by demand (which is probably the case with vacation rental cars) or cost-push inflation (which will result from higher minimum wage laws), will mean that broad exposure to increased costs is undoubtedly on its way.

Recommendations in the best interest of clients

We are now at the pivot point of the Labor Department’s new rule mandating that advisors to retirement plans sell or recommend only what is in “the best interests of clients.” Before, they only had to recommend and sell what was “suitable.” An investment that was “suitable” because it included, say, some bonds or bond funds for someone close to retirement could, at the same time, be charging ongoing fees of 1 to 2 percent per year.

Subscribe to