5 time bombs in your 401k
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Start hoarding cash and get ready for the civil unrest. Occupy wall street is just the tip of what is coming in the next 10 years if we can't get our act together. To much debt and too much greed. And the politicians are to blame. But we have to take responsibility for not just voting them out.
People should not totally trash the tea party movement. It has it flaws. But if you want change, you have to get rid of the old and start with something new. If you don't want new, then just sit home and don't vote. But then don't complain about the problem either. Exercise your right to make a difference.
Jim W.S.,
If you really believe that civil unrest and the collapse of society is imminent, why in the world would you want to hoard little green pieces of paper? Why would you not instead hoard things like food and clothing? Cash only has value within a society. if that society collapses, it loses its value.
I'm squeezing $200 a month out of my extremely tight budget and put it in a Roth IRA, hoping that if I do that for another 20 years I'll get (at least) 20 years' worth of monthly $200 payments out of it.
Sure Robinson, you say gold and silver will always have value. However, why are they valuble? Really stop and think about it. You can't eat gold and silver. You really can't build your house out of gold and silver. (Well, theoretically, I guess you could, but practially nobody ever accumulates enough gold or silver to actually build a house from it). You can't make your clothing from gold or silver. Why then is it valuble?
The real answer is that gold and silver are valuble for the same reason that things like Euros, Yen, and Federal Reserve Notes are valuble. People say that they are valuble and will accept them in exchange for real goods and services. That's it, nothing more. Gold and silver actually have no more intrinsic value than dollars, yen, rubles, yuan or euros. If everyone suddenly decided that they don't really want any gold or silver, their value would disappear.
Mr. Taulli, You dinged Growth Fund of America for it's large size, it's focus on foreign markets and it's concentration in large-cap stocks. Wouldn't you agree that the average investor should have a balanced portfolio weighted toward large cap? If you do, then you want to look for a fund that consistently outperforms the S&P 500. In the ten year period ending February 29, Growth Fund of America produced an average annual,after expense return of 4.77% The S&P 500 came in at 4.17%. Year to date, through March 20, Growth Fund of America grew 14.41, while the S&P 500 was approximately 12.30% As to their "focus" on foreign stocks? Yes, about 16% of Growth Fund of America is outside the U.S. Not sure I would call that a "focus", but it is enough exposure to have been a drag while international stocks lagged, but as part of a long-term strategy, that part of the fund has, and probably will continue to add to the fund's notably good long-term results. Would you advocate eliminating foreign exposure while it is down? A value investor might increase that exposure while it is underperforming. American Funds though, tends to stick to their disciplined approach throughout market cycles. As to their size? The multiple portfolio counselor system essentially makes each of their funds a basket of smaller funds, packaged under one name and prospectus. Yes, there has been some outflow, but where is that money flowing into? I imagine that much is flowing into the funds that will appear on your list of disappointing funds- next year. Oh, and 15% of Growth Fund of America is midcap. Another reason they will likely continue to outperform the S&P500 on a long-term basis. That you would have illustrated the holdings of Growth Fund of America with Union Pacific is misleading at best. UNP isn't even in the top ten holdings of the fund but, what is wrong with some exposure to UNP anyway? Their revenues should grow nicely along with the economy. Meanwhile, the dividend yield is a bit over 2%. Looks beautiful to me. Take a short-term, rear-view mirror approach if you like Mr. Taulli. Please write an essay ten years from now and tell us how how that worked out for you.
Of course, past results do not assure future performance. You can lose money in any fund.
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