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In “Estate plans best laid out in advance” Jonathan Chevreau suggests that you think of an estate plan as an investment where the returns are in the form of reduced taxes and litigation avoidance. And, of course, the older the client the more urgent it is to get it done! Make sure to get professional advice. By the way, just because you have a will, don’t assume that you are in good shape; if it older than 5-10 years old, very likely does not reflect current needs.
Still Chevreau in Financial Post’s “Dawning of the working retirement age” reports from the Boomertirement Conference the unsurprising messages that boomers don’t have the assets to maintaining their standard of living, Greenspan advocated that they take responsibility rather than rely on Social Security, and they better be prepared to work longer to spend less time in retirement.
Conversations on Coverage is a diverse group of employers, employee and retirees who are about to table a set of recommendations, that potentially may become the basis for legislative changes. In “How to get American workers to save more” Theo Francis of the WSJ describes the likely proposals to solve the crisis: creation of guaranteed-benefit retirement savings plans for small business and a centralized federal- government coordinated plan with payroll deduction when employer does not sponsor one. Another proposal from the Aspen Institute advocates a special IRA where lower income workers get government matching contributions.
Jonathan Clements gives us his advice on how to select likely survivors in the flood of ETFs hitting the market, in the WSJ’s “Survival of the fittest: Finding an ETF with staying power” . He suggests picking only ETFs with: at least $200M in assets, from a leading ETF sponsor and having low fees (0.5% is too high for an index fund). You can also add good liquidity so you can get a fair price when buying or selling.
With sponsors beginning to ramp up bond ETF funds, investors are cautioned to look before leaping into them in WSJ’s “Checking out some spiffy new bond funds” . The cautionary notes include: low-cost is a necessity especially for bond funds, methodology of index replication (Vanguard’s new total bond market ETF is a good benchmark for both of these), many believe that an index may not be the best way to participate in the bond asset class because active managers outperform the index in about 40% of cases and because there are no municipal bond ETFs.
Finally, at the risk of flogging a dead horse (or perhaps one that should be dead), in “The mutual fund sucker factor: either way, we’re No.1 in fees paid” Rob Carrick reports that the heat stayed on the Canadian mutual fund industry, in the revised academic report showing Canada to be the worst among 20 mutual fund jurisdiction in term of fees. (What also needs retelling over and over again is that: (1)active managers under-perform the indexes, (2) fund investors don’t even get the returns offered by mutual funds, since they tend to chase last year’s winners, buying high and selling low, and (3) the 1% drag that Canadian investors suffer versus U.S. based ones, and 1.5% disadvantage when compared ETF based implementations of the same asset allocations may result over a 30 year period in $10,000 growing to only $57,000 at 6% instead of $76,000 and $87,000, respectively)