Investing

Much has changed in light of the financial crisis. Among the changes is an increased level of skepticism when it comes to conventional wisdom in matters related to money. For example, a recent article suggests revisiting the following pillars of conventional wisdom--each of which had been pretty much sacrosanct prior to the financial crisis: Rent a home rather than owning it. Buy an annuity rather than investing in the capital markets. Leave money for heirs now rather than keeping it all until...

An annuity ladder basically involves spreading annuity purchases over time. For example, instead of taking $100,000 to purchase an immediate annuity today, a person might purchase five different $20,000 annuities over a seven year period. This approach has a number of advantages: The approach helps avoid the risk of purchasing an annuity at a less then optimal time--for example when interest rates are very low. In this sense, it is somewhat similar to dollar cost averaging when investing. The...

Target date funds are receiving attention from the SEC, the DOL and Congress. The increased scrutiny is a result of the way that target date funds have performed during the market meltdown over the past year. As reported recently , in theory target date funds are supposed to provide a smooth and somewhat automated transition from more risky assets to less risky assets as people approach retirement. One of the problems is that the actual asset allocations for people approaching retirement varies...

Bernard Winograd is an executive vice president at the Prudential Insurance Company . Speaking at a recent industry conference, Winograd expressed his views on the existing methods of explaining retirement issues and solutions in the United States: "The retail system in this country of explaining this (retirement) to people is deeply flawed. There are way too many people in the system without adequate training, and there are way too many people with the wrong motives." The "retail" system...