401(k)
Why Investors "Sell in May and Go Away"
The time-value-of-money concept forms the basic foundation for all investments.
And like anything having to do with people, there are rhythms to the stock market that are a function of time– whether it is the time of the trading day or a particular time of year.
One of these seasonal rhythms is so strong it has given birth to its own adage. Every investor knows it.
It's the admonition to "Sell in May and go away," and it's a proven strategy that results in gains for investors.
According to Sy Harding, author of the book "The Bear: How to Prosper in the Coming BearMarket:" "Over the long term, the market makes most of its gains each year in the winter, and when there is a serious correction, it most often takes place in the summer. We've known about that pattern for decades. The pattern has been confirmed by independent academic studies."
The Logic Behind "Sell in May and Go Away"
There are a myriad of reasons for this, most having to do with the cash flow aspects of the business calendar.
Before Making That 2011 IRA Contribution, Make Sure Your Pension Plan Assets are Safe
The middle of April is fast approaching and everyone knows what that means – time to get those 2011 income tax returns filled out and filed.
What few people realize is that they also have until Monday, April 16, to open a new individual retirement account (IRA) for 2011 or make your annual contribution to an existing one.
With the limit for contributions this year set at $5,000 – or $6,000 for those over age 50 – putting cash in a regular or Roth IRA can shave a big chunk off your personal tax bill.
In addition, this year you may also be eligible for a special "Savers Credit" of up to $1,000 for contributions to either an IRA or an employer-sponsored retirement plan.
I like getting added deductions or credits for putting my money in my retirement plan, if only because I'm a big fan of giving the government the least amount of cash I can legally get away with.
I can't, however, say whether such contributions are right for you – your accountant or tax adviser will have to help you with that decision.
What I can say is this…
If you do put money in a pension plan, whether self-directed through a custodial agent or via an employer-sponsored plan, make sure you know exactly where your money is going – and who's really managing it once it gets there.
Retirement Concerns Plague U.S. Baby Boomers
[Editor's Note: Last week we asked readers if they were concerned about their retirement savings. A collection of reader comments is included below, along with next week's Question of the Week, "What Are Your Five Biggest Worries?"]
Retirement used to be synonymous with leisure and travel. Americans believed that decades of hard work and thriftiness would make for a prosperous and successful life they could enjoy after their jobs – the "American Dream."
Now retirement doesn't evoke the same sense of tranquility for most U.S. workers. Instead, economic anxiety has taken its toll.
Americans used to ride a "three-lane highway" into retirement: a traditional pension, Social Security, and individual savings plans, like 401(k)s.
But the recent economic downturn packed a devastating punch to many 401(k) accounts, U.S. households have dipped into savings to make ends meet, and debt-laden federal, state and local governments will have trouble meeting pension and Social Security obligations.
As the first of the 78 million U.S. Baby Boomers start to retire, most of them worry they don't have enough retirement savings to support them in their post-work years.
Why the Government Wants to Hijack Your 401(k)
It's bad enough that we've been forced to bail out Wall Street. But now the Obama administration is hatching plans to raid our retirement savings, too.
To say that I'm "outraged" doesn't come close to describing the emotions I experience every time I think about the government's latest hare-brained scheme.
According to widespread media reports, both the U.S. Treasury Department and the Department of Labor plan are planning to stage a public-comment period before implementing regulations that would require U.S. savers to invest portions of their 401(k) savings plans and Individual Retirement Accounts (IRAs) into annuities or other "steady" payment streams backed by U.S. government bonds.
Folks, there's only one reason these agencies would do such a thing – the nation's creditors think that U.S. government bonds are a bad bet and don't want to buy them anymore. So like a grifter who's down to his last dollar, the administration is hoping to get its hands on our hard-earned savings before the American people realize they've had the wool pulled over their eyes … once again.
For the full details on the government's newest financial gambit, read on…
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