Ever since I switched from reading Financial Times to Wall Street Journal (FT subscription ran out; no option to use airline miles), I started encountering more and more sob stories.
On Tuesday I mentioned the story about laid-off employees burning through their severance and turning down job offers. On Wednesday I read this article about people stopping using 529 plans because of market losses:
“in the wake of last year’s market collapse and some high-profile fund blowups, some investors — and financial advisers — are paring back their reliance on 529 plans and in some cases are considering alternatives.”
The article goes on to say people are investing in muni bonds, real estate, and fixed indexed annuities outside of the 529 plans instead.
To which I have to say “It’s not 529’s fault!” A few weeks back, there was an article on Times magazine about how 401k plan is bad and should be abolished. I didn’t have time to comment on it back then. Now I just want to say “It’s not 401k’s fault!”
A 529 plan or a 401k plan is a container. Whether you make money or lose money depends on what you put in them. A plan is not an investment. When our mainstream media don’t make this basic difference clear, no wonder the public is confused.
I also wonder if people came up with the ideas for muni bonds, real estate, and fixed indexed annuities on their own, or they were sold by some financial advisers. I suspect it’s the latter.
Say No To Management Fees
If an advisor is charging you a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.