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Who Shredded Our Safety Net?
Mother Jones ^ | May/June 2009 | James Ridgeway

Posted on 04/29/2009 7:55:15 PM PDT by Lorianne

What starts with "f," ends with "k," and means "screw your workers"? That's right—401(k). ___ Fees have always been one of the built-in scams of mutual funds, which charge investors for managing, operating, and even marketing and advertising the fund. On average, the fees add up to 1.5 percent of the value of an account, but they can run as high as 3.5 percent a year. This means that a fund showing a 7 percent gross return has a net return to investors of 3.5 percent after taking into account the 3.5 percent fee.

Congress, of course, has known about this scandal for years, and has periodically floated legislation to limit certain types of mutual fund fees, or at least demand full disclosure. Committees have held hearings, the Government Accountability Office has produced studies, and the Securities and Exchange Commission (SEC) has paid a good deal of lip service to the matter. But in the more than four decades since those first stockholder suits, through Republican and Democratic administrations alike, no meaningful changes have been made. Instead, the most significant challenge to the mutual fund fee rip-off has come from inside the industry, through John Bogle's invention of the index fund.

Bogle's Vanguard funds gave the lie to the fee scam by replacing the vaunted genius of the mutual fund manager with a computer that constantly evaluates the value and trajectory of different funds; his average fees are 20 percent of the industry average. (In the same spirit, the Chicago Sun-Times has in recent years had a monkey picking stocks. The monkey's four-year streak of beating the market was broken in 2007—but he still managed to outperform some major financial advisers.)

(Excerpt) Read more at motherjones.com ...


TOPICS: Business/Economy; Government
KEYWORDS: motherjones; sec
FR Ostrich Brigade ... don't read this.
1 posted on 04/29/2009 7:55:15 PM PDT by Lorianne
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To: Lorianne

Mother Jones?
You might as well post Karl Marx!

Wall Street is rampant with Democrats.

The Mortgage Industry is RUN by Democrats.

Yet Mother Jones is still on its Communist “Rich Republican” rant.


2 posted on 04/29/2009 8:06:22 PM PDT by Kansas58
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To: Kansas58

Ostrich


3 posted on 04/29/2009 8:11:35 PM PDT by Lorianne
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To: Lorianne

It would seem fair in these depressed times to permit IRAs to compete head to head with 401(k) plans. One thing that is not mentioned by Mother Jones, which I point out at the risk of being accused of a sandy noggin, is that in better times companies have typically contributed variable matches to 401(k) plans, whereas they don’t do that for people’s IRAs.


4 posted on 04/29/2009 8:24:15 PM PDT by HiTech RedNeck (Beat a better path, and the world will build a mousetrap at your door.)
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To: Lorianne

Who shredded our safety net? No one. The gov’t turned it into a hunting net to snare productive Americans...


5 posted on 04/29/2009 8:28:06 PM PDT by IFly4Him
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To: Lorianne

You effectively admit the MJ article is very weak, and that their conclusion is ridiculous with your namecalling. No politician is going to abolish funds or stock brokers making profits (hint: that’s because they’re not charities) & if you and MJ don’t like that, you can always find some place where there isn’t capitalism or at least have real ostriches, I suppose.


6 posted on 04/29/2009 9:30:39 PM PDT by Post Toasties (Conservatives allow the guilty to be executed but Lefties insist that the innocent be executed.)
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To: Post Toasties

Posting an article doesn’t constitute agreeing with it.

Refusing to READ an article (and commenting anyway) is Ostrich behaviour.


7 posted on 04/29/2009 10:26:21 PM PDT by Lorianne
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To: Lorianne

If you aren’t going to die in the next 10 years, your 401k will be fine.


8 posted on 04/29/2009 10:26:51 PM PDT by FreepShop1 (www.FreepShop.com)
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To: FreepShop1

Can I get that in writing?


9 posted on 04/29/2009 10:31:18 PM PDT by Lorianne
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To: Lorianne

Some are upset the Mutual Fund Industry, their corporate HR Depts can’t give them security in old age - here’s a bit of reality - no one can guarantee you anything. Lefties typically blame “Republicans” on Wall St. (tell me, how many precious Manhattan or Greenwich Bankers had Sarah Palin bumper stickers on their Lexus’? NONE) but instead they look to the Gov’t as the ultimate guarantor. Sorry, that won’t work either.

The article gave a quote: “Social Security has proved far more solvent and sound than anything Wall Street has produced.” WRONG - due to this recent recession and MBO mis-estimates, 2009 will likely be the LAST YEAR of Soc. Sec. surplus - about 10 years earlier than previously estimated.

Think about it - the US Gov’t has been borrowing and spending from Soc. Sec surpluses since the program began, and 2009 could be the LAST YEAR that such surpluses are available. Remember too that Obama will have a $1.2 Trillion deficit this year.

So - where do you expect a greater Soc. Sec. gaurantee to come from??? Pretty soon the only way will be to print trillion dollar notes like Zimbabwe and pass those out to retirees.


10 posted on 04/29/2009 10:43:10 PM PDT by PGR88
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