Social Security's a little more secure
Recently,
for the third year in a row, Social Security trustees issued a brighter
forecast about its future, pushing back the year its trust funds will be
exhausted to 2037 from 2029 as projected only a few years ago.
Just how important is Social
Security? Some 45 million people receive benefits. According to the Metropolitan
Life Insurance Co.'s Statistical Bulletin. It is virtually the sole
source of income for a fifth of the elderly, and more than two-thirds of
beneficiaries rely on their monthly checks for at least half of their income.
About 48 percent of white seniors would have been poor without Social Security.
The rates for blacks and Hispanics are higher.
A report from Washington's
Center on Budget & Policy Priorities points out that women are especially
dependent on Social Security. More than 60 percent of people lifted out
of poverty by the program are female. Even with those pension benefits,
more than a fifth of women over age 75 live in poverty.
Stock market ironies puzzle, challenge
It's easy to get lost on
Wall Street, where down can be up and ironies abound.
Among these ironies:
* When stocks plunge, all
the talk is of panicky investors dumping shares. But every one of those
shares is bought by somebody ... at a bargain price.
* The best investors are
smart but sometimes smart investors find it hard to do well, and uninformed
investors find it hard to do badly, according to The Wall Street Journal's
Jonathan Clements.
* Investors who are most
confident of their skill and trade the most often get the worst results
because of the trading costs they incur, according to Buckingham Asset
Management in St. Louis.
* You are more likely to
outperform other investors if you just buy market-matching index funds.
* Adding a risky international
stock to your portfolio can reduce overall risk. Foreign stocks may stay
the same or climb just when U.S. stocks are tumbling.
* If the stock market is
down and you're still adding fresh savings, you're buying at bargain prices.
* Younger investors can
profit most from long-run returns, but are the least likely to save.
* Zero-coupon bonds offer
long-run certainty, because you know exactly what return you will get if
you hold to maturity.
* Clements claims the best
time to buy cyclical stocks like cars, paper, and steel is when they
have no earnings. The best time to sell them is when they are making plenty
of money.
* The most-discussed investments
tend to have the lowest returns. They get their prices bid up, lowering
subsequent returns.
* The more successful an
actively managed stock fund is, the more difficult it is for that
performance to continue, because of the influx of new cash from investors. |
