Dollar Bits of Info 10.25.13

5301053415_22a99bc687_bReal Estate

Wells Fargo to waive late mortgage fees this month

Wells Fargo Corp. will not assess late fees on borrowers who missed their payment deadlines in deference to the 16-day government shutdown from Oct. 1 to Oct. 16



Personal Finance

Why teens need personal finance lessons

All of us are aware that money does not grow on trees; hence personal finance should be explained to kids from a very young age.  Most teens have no clue where money comes from and where it goes. Various aspects of personal finance such as income, expenses, mortgage, investment and retirement accounts are never discussed with teens. Many financial problems faced later in life can be avoided if they are provided with proper personal finance solutions from their early years. Just like physical education, personal finance should also be a part of their syllabus so that they can understand the value of earning and spending money judiciously since the very beginning.


Save Yourself

THE shift from defined benefit to defined contribution plans in the private sector is long established. Companies have made the shift because final salary pension plans were too expensive. In a DC plan, the employee bears the investment risk. But that is not the only reason why the deal is less good for workers; overall contributions are also lower.

There is little sign that workers have stepped up their own contributions to compensate. This either means that a) they have no spare income to contribute, b)they are indifferent to a sharp fall in disposable income in old age or c) they are unaware of the problem and will get a nasty shock. One suspects the answer is a combination of a) and c).

The Pensions Policy Institute has just produced a new report looking at the level of contributions that is need to produce an adequate retirement income in Britain. The report is clearly inspired by the auto-enrolment policy which is trying to recruit more workers into pension schemes, with a total contribution rate of 8% of salary. The PPI defines an adequate retirement income as two-thirds of final salary.


Personal finance seems easy. It’s not.

One of the biggest criticisms levied at The Simple Dollar – and pretty much every other personal finance site out there – is that the advice shared on it is really obvious.

Spend less than you earn. At its core, that’s really what it all boils down to, after all.

There’s a problem with that, though. If personal finance advice is so obvious, why are 76% of Americans living paycheck to paycheck? Why does the average American household owe more than $7,000 on their credit cards?

The reason is simple: personal finance advice might be simple, but it’s rather hard to implement.




Investing in mutual funds: Our online survey results

Our online survey on mutual fund investing shows that over 90% of Moneylife readers invest through mutual fund schemes and as many as 85% invest in equity diversified schemes. But there are very few takers for index schemes, the survey reveals

A survey conducted among Moneylife readers on mutual fund (MF) investing showed that over 90% of the 941 respondents use MF for investment. Most of the respondents seem to prefer diversified equity schemes (85%) while about half invest in equity-linked saving schemes. This shows that Moneylife respondents, who were equally distributed over all age groups from 20 years to 60 years, turn out to be investment savvy. As we mentioned in our Cover Story (Best Fund Houses for Equity Schemes), very few invest in index schemes, with just about 10% of the respondents having invested in such schemes. Similarly, very few have invested in multi-asset and hybrid schemes. Nearly 30% of the respondents invest in bond schemes and liquid schemes, while nearly one-third of the survey participants invest in gold exchange traded funds (ETFs).



Pensions ask retirees to pay back tens of thousands

Some pension plans have overpaid retirees for years — now they’re demanding their money back. For retirees, it can mean owing tens of thousands of dollars. And with little warning, their pension checks are being slashed to cover their debt.

In a letter sent to the pension recipients in May, the fund said a 2010 audit found that certain pensions were calculated incorrectly from 1974 to 2004, resulting in more than $5 million in overpayments, according to an IRS filing. The fund is now demanding that the retirees pay back decades worth of mistakes, including interest based on the plan’s rates of return.

In July, the pension fund reduced hundreds of checks to the proper payment amount and then again, to make up for the overpayments, often by as much as 25%.

Since the pension fund is forecasting that many of the retirees will die before their debts are repaid, it is asking many of them to make large upfront payments.

It’s unclear why the pension fund, which did not respond to requests for comment, waited several years to make the adjustments.


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