401k Success
Congratulations to those who’ve been contributing to a 401(k) since 1999. Check out the results of this study found the WSJ Online…
Workers Show Growth Near 9%In Their 401(k)s
The nest eggs of long-term 401(k) investors have grown at close to 9% rate annually in recent years, according to a report released by the Employee Benefit Research Institute and the Investment Company Institute. Americans who invested in a 401(k) plan from 1999 through 2006 saw, on average, an 8.7% annual increase in their balances in a period that included bear and bull markets, according to the research.
The calculations include contributions, investment gains and loans against the accounts. During that same period, the total return on the Standard & Poor’s 500-stock index was 3.9% a year.The average account balance was $121,202 at the end of 2006, up from $67,760 at the end of 1999 for participants who maintained accounts during the entire period.
Interesting option to get that mortgage paid down early, if you have the discipline. Story from CNN Money…
For borrowers who want to pay off a mortgage faster, there’s a plan from the land Down Under that can add a little extra discipline. It’s a mortgage accelerator loan program pioneered in Australia. Home-buyers get a variable-rate, home equity line of credit (HELOC) instead of a fixed-rate loan for their first mortgage. They deposit their paychecks into the account and can draw on it to pay expenses and bills - including the mortgage.
Any extra cash above what the borrower takes out is put toward the HELOC. “The money put into the account beyond interest owed applies against the mortgage loan balance, accelerating payoff and potentially saving tens of thousands in interest,” said Michael Barrett, Executive Director of Macquarie Mortgages USA, one of the companies that offers the loan.
That’s not the only benefit. When the account holder deposits a check, the debt immediately falls for a lower balance used to calculate interest. If the paycheck arrives on the first of the month, and the mortgage isn’t due until the 28th, the balance falls by the size of the paycheck for all the days between. If you net $1,500 every two weeks, you could save $12 or $13 a month, which could knock 10 months off the term of the loan and save almost $10,000.
Stock market have you worried? Check out this read from Forbes…
This is just another 5% to 7% pullback, like many we’ve seen over the past three years. The recent decline may be the next pullback.
The good news is that the S&P 500 is already down almost 5% from the peak on July 19. A 5% to 7% pullback is the modern equivalent of the 10% correction of prior market cycles given the elongated and smoother business and Federal cycles.
Peek inside the portfolio of the Fed Chairman. This from Fox News…
Fed Chairman Ben Bernanke Keeps Personal Finance Portfolio Simple
Federal Reserve Chairman Ben Bernanke has a complex job manning the world’s largest economy, but when it comes to his own finances he keeps it pretty simple. The chairman’s financial disclosure form, released Tuesday, showed that Bernanke is a millionaire, with holdings last year in no-frills investments, including U.S. Treasury securities, mutual funds and annuities.
Bernanke, 53, took over the central bank in February 2006, succeeding longtime chairman Alan Greenspan, who also played it safe when it came to his own investments while at the Fed.
Geeky authors of the book, “America’s Cheapest Family” with some basic tips.
