The Good News:
The Economy is not Deteriorating
by Guy Baker
Well the good news, if you want to call it that, is that the economy is not deteriorating. It seems to be holding steady. So that is definitely a plus. As a result, most of the economic data for the last week was positive.
Here are some examples:
- The ISM Manufacturing Index jumped to 52.9 from 48.9 in July
- Durable goods orders were up 4.9% - this was the biggest gain in the last two years
- Consumer confidence rose more than expected to 54.1 from 47.4 in July
- New-home sales increased 9.6% in July. This is the 4th consecutive monthly gain
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Stick with the stock market in order to recover from 2008
The stock market plunge of 2008 has workers in their forties and older wondering whether their potential retirement incomes will be permanently impaired.
Retirement savings accounts lost an average of 32 percent of their value last year, according to a study by the Urban Institute. . . . -READ MORE-
Misunderstanding target date funds
So-called “target date” mutual funds have been hailed as a valuable innovation for workers investing for retirement.
The funds contain a mix of stocks, bonds, and cash, and the particular target date for each fund is supposed to match a worker’s age and need for risk at the time of investment. It is assumed that as the fund approaches its stated target date, its holdings will become more conservative and available for retirement income.
-READ MORE-What can investors expect after the market beating of 2008?
U.S. stocks rallied nearly 50 percent from March 9 through the end of July but investors who had suffered through a historic 16-month bear market remained defensive. What did it mean and what are the chances for recovery?
Current economic conditions make the picture even more cloudy. Homes continue to go into foreclosure, jobs continue to be lost, and unemployment hovers at 10 percent—in some communities as high as 15 percent. . . .-READ More-
College costs, big 401k losses, & more.
A quarter of parents saving money for college education believe that travel to the moon will be cheaper than a four-year education by the time their youngest child attends college.
That was among several dismal findings by OppenheimerFunds in its latest survey of families.
Not sure how to invest?
Use interest rates as your guide
Ok, so last year your retirement account matched the national average decline of 32 percent as detailed in Stick with the stock market in order to recover from 2008. That’s a big chunk of change to lose and you are agonizing over the best way to make it up.
Like many Americans who lost faith in the stock market last year you might be considering keeping everything in a fixed income account or investment. Good luck.
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