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http://pensions-and-investments.org/Click Here For More Information
If you’re like most people, you probably already have an idea on what pension is and what investments are. You know that they are two different things, like how Martians and Earthlings are totally different beings. But did you know that they meet at certain points in the financial world?
Pension is something that you pay for every month so that you’ll have money by the time you retire. It’s saving up money for your retirement. Investments, on the other hand, are income-generating products that you buy and earn interest from.
While most countries in the world require pension payments from their citizens through their employers, many of them don’t really care about how the pension money is being used. While some countries don’t really do anything, some countries give their people the option to invest their pension in investment products. And they offer different types of retirement plans too.
Take the case of the United States, for example. It offers Individual Retirement Account (IRA) accounts and 401K accounts. Although there are differences between two, they are not major. In fact, they are all too similar in giving future pensioners leeway on where they can invest their money.
What are the different types of investments? Probably the most common type of investments are stocks and bonds. While stocks are basically shares of ownership in certain company, bonds are debt instruments that the needs to be paid back to investors, capital plus interest rate.
Stocks really depend on a company’s profitability over the long-term. You could buy a stock now at $5 per share. When the price increases to $25 per share, you stand to profit five times more than your investment. With bonds, the interest rate is fixed typically at 12% and the company is obligated to pay. This is one reason why bonds are regarded as safe investments.
Stocks and bonds aren’t the only investment instruments around. You can also invest in mutual funds and precious metals like gold and silver. If you want to know more about these investment instruments, you can find plenty of free information online.
If you have a retirement plan that is flexible, you should talk with a financial planner on how to spread your investments. The idea is to use the pension money to invest in high-yielding instruments so that money works for you when you retire and not the other way around.
Take a hands-on approach to your investment because sometimes even professionals can be clouded in their judgment. You only need to look at what happened in the last global crisis to know what we mean. Some people actually experienced exposure (read: loss) from the crisis, even when they were working with an experienced investing professional.
Get to know your pension plan and find out what is possible with your plan. Also, read more about the different types of investment instruments out there. With proper planning, you wouldn’t have to worry about money when you retire.
Most people believe pensions and investments are two absolutely different things. They do know a pension is something you receive when you are too old to work anymore, based on the contribution you made during your work years. They also know what investments are, but they don’t see how the two can be connected.
With pensions, things are clear: you pay a certain amount of money every month, for the entire duration of your working years, so that you can have a steady income by the time you retire. Investments, on the other hand, are things you buy and then earn from them, either because their value increases over time or because they generate an interest.
This rule applies in most countries worldwide: citizens pay what’s imposed by law, but they have no idea where their money is going. There are countries, though, where people are given the opportunity to invest the retirement money in products that could generate a profit. Residents of these countries can choose what type of retirement plan they want to opt for, thus having a little bit of control on their money.
In the United States, for instance, citizens can choose IRA accounts or 401k accounts. There are some differences between the two options, but in fact neither of them gives the individual a real control over where their money is invested.
There are multiple investment types, the most common being bonds and shares or stocks. Bonds are debt instruments. You invest in them, then you get paid back the capital you invested, plus some interest. Stocks are shares of ownership in companies. Such shares are sold to individuals who wish to own a part of various companies. If those companies are profitable, owners get a part of the profit, but if they aren’t profitable, the shares won’t bring their owners any gain by the end of the year.
Actually, shares are long term investments. You can buy today a stock and pay $1 per share. If that company is doing really well and develops profitably over the next period of time, in ten years those shares could be worth $50 each, which means you can sell them and get 50 times your initial investment. Bonds usually have a fixed interest rate of 12% which the company would pay you regardless its profitability. As you can see, shares could be way more profitable, but bonds are much safer investments.
There are also other investment instruments one can use to place their retirement money in. For instance, investments in mutual funds or in gold or other precious metals IRAs are pretty common.
If you have a flexible retirement plan, it’s a good idea to discuss with your financial adviser in order to determine which is the best way of investing your money. You could lower the risk by choosing multiple investment instruments, so in case one of them fails to bring you profit, at least you could have others that perform well. It’s wiser to try to control your personal finances rather than go with the flow and hope you’ll be fine.
1. Gold analysts are the most bullish in a year on speculation that investors are reducing near-record bearish bets after the biggest plunge in prices since 1981. Fifteen analysts surveyed by Bloomberg News expect gold to rise this week, two are bearish and four neutral, the highest proportion of bulls since December 2012. Short positions held by hedge funds and other large speculators jumped almost fourfold from October to Dec. 24 as the bear market deepened, the latest U.S. Commodity Futures Trading Commission data show. Prices rebounded as much as 5.4 percent since slumping to a six-month low on Dec. 31.
2. The united stimulus front of central banks is starting to splinter as 2014 dawns. The Federal Reserve — soon to be led by Janet Yellen, begins pulling back on its quantitative easing amid stronger U.S. growth, and the Bank of England is trying to cool its housing market. The European Central Bank and Bank of Japan lean toward more monetary action to fight weak inflation. The ECB and BOE both hold policy meetings this week. While the United States is pumping the breaks, other nations are continuing to stimulate their economies.
3. Relatively few people alive today in the West have experienced deflation, but for Europeans, that may be changing. Anxieties are rising in the euro zone that deflation—the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s—may be starting to take root as it did in Japan in the mid-1990s. Deflation is a hidden threat within the Eurozone economy.
1. Problems in this Detroit run deep. Police on average take nearly an hour to respond to some of the most serious calls. Firefighters must contend with blazes that erupt among the roughly 78,000 abandoned and vacant structures. The population has shrunk to 700,000 from a high of 1.8 million decades ago. But when federal bankruptcy Judge Steven Rhodes last week affirmed the city’s eligibility for Chapter 9 bankruptcy, he cited streetlights as a prime example of Detroit’s decline. Nearly half of the city’s 88,000 street lamps are dark, according to city estimates. It will cost $12.5 million from the city to revamp roughly 5,000 streetlamps in two areas. The city of Detroit has come a long way from it used to be. As a nation we are only as strong as our weakest link.
2. Federal Reserve officials are closer to winding down their controversial $85 billion-a-month bond-purchase program, possibly as early as December, in the wake of Friday’s encouraging jobs report. Fed Chairman Ben Bernanke will have to build consensus among officials about how soon to pull back on a program that has been the center of market attention for months and whose effectiveness isn’t wholly clear. Many are getting more comfortable with starting a delicate process of winding the program down, though disagreements about timing and strategy could emerge, according to public comments and interviews with officials. The Fed’s next policy meeting is Dec. 17-18 and a pullback, or tapering, is on the table, though some might want to wait until January or even later to see signs the recent strength in economic growth and
hiring will be sustained. On Tuesday, officials go into a “blackout” period in which they stop speaking publicly and begin behind-the-scenes negotiations about what to do at the policy gathering.
3. U.S. employers are gaining confidence heading into year’s end, hiring at the quickest clip since before Washington’s political dysfunction rattled consumers and businesses this fall. Payrolls rose by a seasonally adjusted 203,000 in November in sectors ranging from construction to health care, a striking pickup at an uncertain moment for the economy. Moreover, the jobless rate fell to 7% from 7.3%, though its declines in recent months have been driven in part by people leaving the labor force.
1. Janet Yellen, the nominee for chairman of the Federal Reserve, said that she was committed to encouraging a strong economic recovery. Yellen stated that she will ensure that monetary stimulus is not removed to soon. The new soon to be chairman of the Federal Reserve feels it is important that we support the economy as much as possible in order to promote strong growth. “It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero,” she said. Yellen’s testimony comes at a very critical moment for monetary policy. The Federal Reserve is in heavy debate of slowing down their $85 billion monthly bond-purchasing program.
2. From money-market rates to yields on government and company bonds to equity prices, financial conditions in the U.S. are healthier than before Lehman Brothers Holdings Inc. collapsed in 2008, even as growth falters in Asia and Europe. The U.S. now has the strongest economy among industrialized nations, which would be its highest rank since 2000, according to David Woo, the New York-based global head of interest rate and currency strategy at Bank of America Corp. While the Fed’s decision to push borrowing costs to historical lows in December 2008 helped developing economies recover more quickly as the U.S. housing bust crippled Americans’ ability to spend, investors are now showing greater conviction that the nation will underpin growth globally.
3. International investors were net buyers of U.S. long-term portfolio assets in September as demand strengthened from China and Japan, the two largest foreign holders of Treasuries. The net long-term portfolio investment inflow was $25.5 billion after a revised $9.8 billion outflow in August, the Treasury Department said in a statement today in Washington. China raised its holdings of U.S. government debt by 2 percent and Japan boosted its by 2.5 percent, the department said.
Silver may be the good news metal, but it’s about to have a serious retest of its “bad news” capacity.
It’s been a long while since we’ve witnessed visible inflation.
The last time occurred after Bretton Woods was rescinded in 1971 and the U.S. dollar was allowed to float. Essentially, this was yet another in a series of defaults. Inflation rates soared.
One of the most effective perceptual tricks played on the mainstream has been the modification of consumer price inflation.
Obviously, the new adjustments have helped to overestimate GDP and reduce the amount the social security price increases. In addition, they have completely masked the perception of real inflation and the reduction of purchasing power.
Inflation is real for those who eat and purchase fuel for their automobiles.
According to the Intuit Spending Index, over the past two years expenses such as daycare, tuition, health care, and utilities are up by solid double digits — while CPI remains below 2%.
Stealth inflation involves the growing implementation of product redesign. It also involves mainly resizing or re-weighting across the board — from sugar to diapers.
The Next Visible Downturn
Any meaningful, sudden drop in equities would put immediate pressure on the Fed to further support the financial systems and, mainly, the banking sector.
Despite warnings from the Treasury Board Advisory Committee (TBAC) with regard to limited collateral available for the REPO market, political pressure could very likely result in a fully captured Federal Reserve.
Leftover Federal Reserve independence (if any) would be gone instantly, and this could be the final nail in the coffin for confidence. A treasury default or collateral-induced credit freeze would likely create a much larger crisis, one that could quickly spiral out of control in terms of interest rates.
Sovereign creditors will not likely sell dollar denominated assets by choice. Rather, they would respond in the same manner as their Western counterparts – via an act of aggression or reaction to a crisis.
The Fed would need to step up, stoking money velocity and sending commodity prices soaring.
There is an irony to the results of this series of events. While solid industrial demand competes with silver investment demand, the drop in nominal economic activity would light the fire under investment demand — effectively ending price manipulation.
Jeffrey Lewis has been an advocate for silver purchasing for the past six years. He writes regularly about it at silver-coin-investor.com
1. Uncertainty has been left behind after the government shutdown. Concerns for the stimulus cut are growing. Fed officials could act at one of the following two meetings—Dec. 17-18 or Jan. 28-29. Their decision will turn on the strength of an economy that would still be a bit harder to read and possibly stung by recent uncertainty. Key reports on employment, retail sales, inflation and housing for September have been delayed. October data could be stained by the fact that government surveys of households and businesses didn’t go out in time. November figures will be collected under normal procedures, but could be a challenge to scrutinize because they could be influenced by lingering effects of the shutdown or a bounce-back from the government’s reopening.
2. The government shutdown damaged economic growth. Forecasting firm Macroeconomic Advisers estimated the shutdown would trim fourth-quarter growth by 0.2 percentage points, but boost growth in early 2014 by nearly as much. Morgan Stanley said the shutdown would shave 0.4 percentage points off fourth-quarter growth. IHS said 0.6 percentage points. Nomura put the toll at a whopping 0.8 percentage points. It will be months before we’ll know whose estimates came closest to the mark, not least because government agencies stopped collecting data during the shutdown. But history suggests the impact will likely fall on the lower end of the spectrum.
3. JPMorgan Chase & Co has reached a tentative $13 billion agreement with the U.S. Justice Department to settle government agency investigations into bad mortgage loans the bank sold to investors before the financial crisis. As part of the deal, the bank will likely cooperate in criminal inquiries into certain individuals involved in the conduct at issue, the source, who declined to be identified, said.
1. The October survey found 85% of economists saying the risk to their growth forecasts was to the downside, meaning growth would prove weaker than they anticipated. For most of the year, the majority of economists saw upside risks to their forecasts — the possibility of stronger growth than they expected. As recently as June, two-thirds said stronger growth than they had forecast was more likely than weaker growth. Economists are expecting major things for the U.S. economy in 2014. A major expectation is for the Jobless rate to be at approximately 6.6% at the end of 2014, down from the current 7.3%. This would require that the U.S. economy add 2.3 million jobs over the course of a year.
2. When President Barack Obama became the first president to nominate a woman to head the Federal Reserve, he elevated Janet Yellen to a global position of influence that shows how wide the gap remains for women to achieve equal representation in positions of power. If Yellen is confirmed by the Senate, she would be the first female chairman of the Fed and also may soon be, temporarily at least, the only woman on the Fed board of governors. Fed Governor Sarah Bloom Raskin has been nominated by Obama as deputy Treasury secretary, which would make her the highest-ranking woman in Treasury history. Elizabeth Duke left the central bank at the end of August. As the successor to Ben S. Bernanke, who began the first of his two terms as chairman in 2006 when he was 52, the 67-year-old Yellen would become the 15th head of the U.S. central bank since its inception in 1913.
3. Higher food costs from China to India are raising prices for a third of the world’s people, adding to the challenge of sustaining the global economic recovery as the growth outlook dims. Consumer prices in China rose 3.1 percent last month as food costs advanced the most since May 2012, statistics bureau figures showed today in Beijing, while India’s Commerce Ministry said inflation unexpectedly accelerated to a seven-month high. Both gauges increased more than economists had estimated. The reports signal threats to growth in two of Asia’s three biggest economies as a partial shutdown of the U.S. government risks leading to a default that would roil financial markets and cause recession. The International Monetary Fund cut its global growth outlook last week as capital outflows further weaken emerging markets.
Precious metals rose Monday morning in London, with gold recovering more than $20 of last week’s $50 drop to trade at $1,287 per ounce as world stock markets fell ahead of this week’s technical default by the US government.
Silver outpaced the rally in gold, adding 1.5% by lunchtime in London.
“Although a default would clearly be bullish for gold,” writes Jonathan Butler at Japanese conglomerate Mitsubishi, “the U.S. is very unlikely to breach the debt ceiling. “The coming days could see prices drift lower as the resolution of the crisis prompts a rally in risk assets and a move out of gold.”
Senate Democratic leaders yesterday refused to agree a short-term deal to avert Thursday’s debt-ceiling deadline only by locking in budget cuts for 2014, the New York Times reports.
Failure by the U.S. to honor its obligations “would mean massive disruption the world over,” said IMF managing-director Christine Lagarde. “We would be at risk of tipping yet again into a recession.”
Dropping as low as $1,264 per ounce on Friday on suddenly heavy volume in U.S. gold futures, gold today “[saw] some quite good physical demand,” Bloomberg quotes Bernard Sin at Swiss refining group MKS, refering to wholesaler buying in Asia.
Amongst Western investors, however, the SPDR Gold Trust shed another 9 tonnes of bullion during last week’s drop in gold prices, taking the quantity needed to back shares in the largest gold ETF to a new 56-month low of 891 tonnes.
Going into last week’s expiry, SPDR options contracts were concentrated Friday in $124 and $122 puts, according to Reuters data.
Having been out of the money all week, those put options – which gave holders the right to sell SPDR shares at those prices – gained value during Friday morning’s sharp plunge, with the ETF’s shares falling to touch that lower level before ending the week at $122.60.
In Comex gold futures, says ANZ Bank in a note, “It is difficult to gauge the extent of speculative positioning” because the weekly CFTC regulator’s Commitment of Traders report is missing thanks to the U.S. government shutdown.
But “open interest has been rising,” says Standard Bank’s commodities team. “Combined with a declining price, would suggest that new short positions had been added.”
Over in India and China meantime – the world’s top two physical gold buyers – new data showed consumer-price inflation in both countries rising to seven-month highs in September.
Now at 3.1%, “The rise of [China's] CPI inflation leaves little room for policy easing [ie, interest rate cuts to spur the economy] as the benchmark deposit rate is only 3%,” says Nomura’s chief China economist in Hong Kong, Zhiwei Zhang.
Gold bullion refineries in India are running at just 25% of capacity, according to industry figures. Because the government’s strict anti-import measures, plus falling gold prices domestically, mean they cannot source feedstock to meet the current festive-season demand.
Last week’s drop in SPDR gold holdings coincided with a drop of 120 tonnes in the world’s largest silver ETF, the iShares Silver Trust.
Shedding metal to back its shares at the fastest pace since May, the SLV only retreated however to a 3-week low at 10,505 tonnes.
Adrian Ash runs the research desk at BullionVault. Formerly head of editorial at Fleet Street Publications – London’s top publisher of financial advice for private investors – he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to a number of investment websites.
Anglo American Platinum Revises Restructuring Proposals
LONDON–Platinum producer Anglo American Platinum Ltd. (AMS.JO) Thursday revised its restructuring proposals to align the business with its long-term demand expectations, and said that it has agreed to grant voluntary separation packages to 3,300 employees.
STORIES OF INTEREST
Randgold Resources Likely to Up Kibali Gold Mine Production Forecast
LONDON– Gold miner Randgold Resources Ltd. (RRS.LN) said Thursday in an update on its new Kibali gold mine in Congo that a new production forecast for this quarter is likely to exceed its original estimate of 30,000 ounces.
Two Chinese Firms Shortlisted for Glencore’s Peruvian Copper Project – Sources
Glencore Xstrata PLC’s (GLEN.LN) effort to satisfy a Chinese regulatory requirement that it sell a Peruvian copper project has advanced, with two of four Chinese companies that made initial bids for the mine invited back to conduct due diligence and make a second bid, three people familiar with the situation said.
Russia’s Jan-Aug Gold Output Rises 15.1% on Year
MOSCOW–Russia’s gold output between January and August rose 15% compared with the year-earlier period, the union of gold producers said Thursday.
Talvivaara Mining: Assessing Funding Options
LONDON–Talvivaara Mining Company PLC (TLV1V.HE), said Thursday it is undertaking an assessment of all available funding options to secure its financial flexibility and a sufficient level of liquidity going forward.
Gold Ends Below $1,300 Amid Signs of Progress in Budget Talks
NEW YORK–Gold fell on Thursday as investors cut back holdings of the haven asset amid signs of a potential breakthrough in the U.S. political stalemate that had triggered a partial government shutdown and threatened a breach of the U.S. borrowing limit.
Write to Tatyana Shumsky at email@example.com
(END) Dow Jones Newswires 10-10-131532ET Copyright (c) 2013 Dow Jones & Company, Inc.
1. Federal Reserve officials will hold their next policy meeting on October 29-30. The October meeting is the second to last meeting of the year. The last meeting of the year will be on Dec. 17-18. If the Federal Reserve does not start to winding down their bond-buying program at the end of October or December, the debate will continue into next year. The government shutdown and budget deficit issues are leading economist and investors to believe that the Federal Reserve will not start their bond tapering until sometime next year
2. The Labor Department canceled its scheduled release Friday of the September employment report—a key gauge of the labor market’s health. As lawmakers bickered over how to reopen the government, it wasn’t clear how long the lights would stay on and which other economic-data releases might be delayed. If the shutdown ends soon, the jobs and government economic reports on income, spending, inflation and other activity could be released with only minor delay. But a prolonged shutdown could muddy the figures. The employment report relies on surveys taken around the middle of each month. Labor’s household survey for October, which is used to determine the unemployment rate, would normally begin the week of Oct. 14 and ask about a worker’s employment status the prior week.
3. Treasury Secretary Jacob J. Lew said Congress needs to pass a debt-ceiling increase by Oct. 17 or the U.S. will be “dangerously low” on cash and risk defaulting on its payments. If the United States government, for the first time in its history, chooses not to pay its bills on time, we will be in default, Lew said. There is no option that prevents us from being in default if we don’t have enough cash to pay our bills. A raise must be made in order to prevent a catastrophic default.