Skip to main content

Don't Sabotage Your Retirement to Pay for College

Image
By
It's quite normal that parent's desire to pay for college expenses for their children. However, doing so often is a competing objective against becoming financially independent and funding one's retirement. Emotions aside, remember there's only one chance at retirement, but your children will still have a lifetime of opportunity whether you pay for all, part, or none of their college.

Christine Benz from Morningstar recently wrote on the topic, saying:

"But by multitasking as so many parents do--saving for college and their own retirement at the same time--they run the risk of coming up light on the retirement front with no way to make up for the shortfall, except for working longer. The old saying about this topic is dead-on: Your child can get a loan to pay for his or her college education, but no one will give you a loan to pay for retirement if it turns out you haven't saved enough. Given increasing rates of longevity, rising health-care costs, and what many expect will be only so-so returns from the stock and bond markets in the decades ahead, can anyone ever really be sure they'll have enough money on which to retire?"

Click here to read the full article: http://news.morningstar.com/articlenet/article.aspx?id=558929

If your retirement planning works out well, you can always help your children pay their loans off and do so with the benefit of hindsight rather than putting your own well-being at risk up-front.


Popular posts from this blog

Are We All Socialists Now: Government Intervention and Stock Market Returns

By
As a recent Newsweek cover asked, "Are We All Socialists Now?" And if so, should U.S. equity investors be alarmed by the prospect of greater government intervention in the economy? Historical data looking at this very question may be surprising to you. Click the link below to watch a short 6 minute video, which provides some objective comparisons of stock market returns from the more free-market system in the U.S. compared to the returns from more interventionist governments from around the world. The evidence suggests that government intervention is just one factor among many affecting stock returns, and that an above-average degree of intervention is not necessarily associated with below-average returns. https://admin.acrobat.com/_a772887163/governmentinterventionandstockreturns/ To Your Prosperity ~ Kevin Kroskey
Read more

Last Week Was Not One To Miss

By
Last week the Dow rose 7.3% last week amid earnings reports from many companies, as reported in the Wall Street Journal ( http://online.wsj.com/article/SB124782681174757379.html ). For most companies, it's not like the reports were necessarily good. It was that the news was not as bad as expected . This rapid rise in the market occurred despite poor economic news, including rising unemployment now predicted to go north of 10%. To many investors, this seems counter-intuitive: poor economic news and declining earnings reports compared to the same time last year yet the market goes up markedly. How come? It's quite simple actually. The market looks forward and reacts to new and unknowable information . So even though the news was bad, much of it was not as bad as expected . Thus the new information positively changed market expectations and prices adjusted upward. Unless you can predict the future, as investors we must stay invested through good times and bad to ensure we experien...
Read more

Bond Investors Misled by Wall Street Journal Article

By
In an article published today in the Wall Street Journal, entitled "The New Bond Equation," the author attempts to educate readers about the potential risks involved in investing in bond mutual funds, given the current economic environment. He writes: "As the financial crisis heads into its third year, investors in bond funds are facing some difficult choices. Investors usually turn to these funds for safety. But bond funds are facing a host of pressures that are driving down returns, raising long-term risk—and making it tougher to settle on the right investment strategy." While I agree with the author's statement above, he makes some statements that mislead bond investors. ( Click here to read the full article. ) For example, he writes: "....they’re buying vehicles that invest in intermediate-maturity bonds. These funds also typically hold a mix of government, mortgage and investment-grade corporate bonds, which spreads risk around. Even cautious intermedi...
Read more