All Posts Tagged With: "mutual fund"
How college can negatively impact your retirement
Jennifer McClelland | RSS | Sun, Nov 15 2009 | 1 Comment
It’s looking more and more that if you have discipline and want to save for the future, going to college may be a bad investment. A four year college degree costs too much and proves too little. It has become increasingly unlikely to be able to make up the cost of a college degree, even with the fact that college grads get paid more.
In an example for the New York Post as written by SmartMoney associate editor Jack Hough, if you look at two people from similar backgrounds each of whom save $16,594 for college. One decides to not go to college and invests his savings in a mutual fund that tracks the broad stock market. He ends up making an average pay that peaks at $32,538. He adds to his savings 5% of his after-tax income and it returns 8% a year.
His friend goes to college. He goes to public school and transfers to a private school. He ends up spending $48,286 in tuition and fees. These fees do not include room and board. He ends up spending $34,044 after grants. When he finishes school he owes $17,450 at 5% in student loans. He starts making just over $23,000 a year after taxes and peaks at almost $57K. Like his friend, he sets aside 5%. It will take him 12 years to pay off his loans. When he finally escapes from the debt at age 34, he starts investing in the same fund as his friend. He is able to make bigger monthly contributions. However, when they reach 65, the friend who didn’t go to college will have saved almost $1.3 million while the one with the degree will have less than a third of what his friend saved.
I believe that this all comes back to the fact that many people don’t think about saving rather they want to have a comfortable lifestyle while they can enjoy it. I’m not saying that you can’t enjoy things when you’re 65, but you can enjoy travel and have more ability to do so when you’re younger.
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Tags: retirement, grants, going to college
People who make less are less likely to save for retirement
Jennifer McClelland | RSS | Sat, Oct 24 2009 | 0 Comments
I read somewhere in the past few months that said that sometimes when people go to college, because of debt and other issues, the college graduate would not have as much money saved at retirement as the person who graduated with just a high school degree, even though the person with the high school degree earns less.
Of course, this is counting on that the person who did not go to college not only has a college fund, but invests that in a mutual fund that tracks the market and also puts money into their retirement fund on a monthly basis.
While this is a scenario that could happen, it often doesn’t. A report by the Office for National Statistics in Great Britain reported that people who earn less do not contribute to their pension funds as often as those who earn more. It said that 21% of men and 32% of women who earn less than 300 pounds a week were contributing to their pensions.
This is in stark contrast to the 76% of men and 82% of women who earn over 600 pounds per week give to their pensions and have an employer sponsored pension program.
This could also have something to do with the fact that contributions to employer sponsored pension programs are down. According to reports, in Great Britain, in 1979, 65% of employees were contributing to their employer’s pension program. However, the number dropped to 57% in 1995 and then to 54% in 2004. In the private sector, 40% were contributing to their fund while 25% were contributing in 2005.
A problem has come up regarding the pension programs because people simply aren’t contributing to their pensions, and they don’t continue to participate in a program. Contributions to 33% of pensions stop after four years. If this trend follows that means that within 10 years, as few as 40% of pensions will still be getting contributions.
A serious issue in the United Kingdom, as well as all across most of the world, is the aging population. In the UK there are four working people to every retired person. In the future, the ratio will turn. In the United States, many are worried about what happens as our population grows older. Obviously this issue is just as large in other countries as well.
This is why everyone should start saving for retirement. You can never be too young to contribute to a pension fund or a 401 k or any other kind of retirement fund.
Related posts:Today’s Ebook – What Women Need to Know About Retirement
The Pitch – Are you pulling from your retirement fund?
How college can negatively impact your retirement
Tags: pension program, aging population, retirement fund
The Pitch – Where is your money going?
Jennifer McClelland | RSS | Fri, Aug 14 2009 | 0 Comments
Where are you putting your money?
Question:
Recession! That’s a word that people are really turning a deaf ear to. However, there are a few things that we all still need to remember and do while the market is still down and the economy is nursing it wounds.
Money is the biggest issue. It’s something everyone wants, so where are you putting your money these days?
Answer:
Right now, analysts are warning against putting your money in the stock market, they’re warning against putting your money in real estate, it doesn’t seem like your money is safe anywhere. However, if you put your money in a mutual fund that tracks the market on a whole, perhaps you may just beat inflation for the time being. This may have to do for some of us who don’t have the time to micromanage our portfolios and watch every move the market makes.
Have an idea or want us to use your pitch in the next issue? Then, make a submission on The Pitch Page. Related posts:
The Pitch – Are you pulling from your retirement fund?
The Pitch – Are you ready to sell your house?
Tags: next issue, stock market, deaf ear
