I’ve been watching the U.S. consumer savings rate climb. It’s been heartening to witness the ascent past 5% on its way to perhaps 7%. Any way you look at it, this is a welcome—if not critical—change in our financial/economic behavior.
I started digging into how this rate is computed and asked a few of our resident economists for some explanation. As a result, I don’t feel quite as good about the savings rate as I did, but I understand the basis for it much better.
I occasionally participate in webcasts, taking questions from Vanguard investors on various financial topics. Almost invariably, someone asks about reverse mortgages. Should they or shouldn’t they? How do they work? And are they legitimate?
Last question first: Yes, reverse mortgages are legitimate, and they seem to be gaining in popularity. But it’s clear that as with any financial decision, opting for a reverse mortgage requires some homework. You will want to understand not only the provisions and payment stream but also the upfront and continuing costs.
Anytime I forget something, I rationalize that what I’m really doing is clearing out space to allow new information to be stored in my brain. It’s a bit like cleaning off my desk or deleting cookies from my computer.
Are Americans becoming more thrifty? Personal savings rates are up, the government statistics tell us. This fact has engendered a wide-ranging debate. Is this just a short-term deviation from America’s obsession with spending, or is it a permanent change?
I believe it’s a permanent change, but not for the reasons you might think.
If you rely on a financial advisory firm to manage your assets, how do you know if you’re getting what you pay for?
We think the answer to this question comes down to several specific points, one of which (an important one, but by no means the only one) is investment performance. If your advisor hasn’t at least outperformed broad market indexes by the amount of his or her advisory fees, ask yourself whether it might have been simpler to invest in broad index funds on your own.
