Newspaper conferences can be a tad disappointing because they invariably drift to the key issue facing the industry: fewer people are reading a paper these days.
That’s especially true for young adults.
Most people in journalism know the perceived answer to this dilemma – make newspapers so interesting and relevant to people’s lives that they just have to read them.
So let me get right to the point of this column: I went to a newspaper conference recently where an intelligent man revealed how today’s young adults can live out their sunset years plucking their breakfast grapefruit from a tree in the Sun Belt rather than foraging through a dumpster in a back alley.
The key, of course, is saving and investing your money. And starting it early.
That’s the advice of Craig Ueland, president and CEO of the Russell Investment Group in Tacoma, one of the top investment firms in the world.
Ueland, who also offered great investment advice for people of any age, was a speaker at the annual conference of the Society of Business Editors and Writers.
In a nutshell, he advised everyone not to count on someone else for financial security.
“The government is not going to be able to provide security,” he said. “And companies are not going to accept the burden, either.”
He said he believes there will be some sort of fix in the Social Security system, but he noted that’s iffy. And he said corporations are rapidly shedding themselves of costly pension systems.
So that leaves us all to make our own investments. And we’re not doing so well with that at the moment.
Ueland noted that the way most people select a mutual fund is to find a list of top performers and put all their money in No. 1. That’s a big mistake, he said.
“The top-performing fund is the one that takes extraordinary risks,” he said, noting the risks either work or they don’t.
But that top performance number was for the past, he said. With top performance comes a huge influx of money and the likelihood of not being able to invest it in ways that continue a top performance.
“Past performance is not a reliable indicator of future performance,” he said. “It would be like driving down the freeway using only your rearview mirror.”
Instead, he said, investors should look for the No. 2 and No. 3 funds, especially those with a long-term performance of being near the top under different economic times.
Buying a stock when it’s hot means you’ll pay a high price. Then when it does poorly, many investors sell, guaranteeing a big loss.
“We have to help investors from shooting themselves in the foot,” he said.
He recommends that you:
* “Make a sensible asset allocation with as much risk as you can take and have the guts to hang in there when things are going against you.”
* “Diversify your portfolio and get into various asset classes.”
* “Don’t automatically sell a sector that’s underperforming.”
Ueland said that’s how most pension funds operate because they know the principals of asset allocation, diversification and discipline.
He recommended people start saving and investing as early as possible. Even small amounts can grow large given enough time.
He suggests people who like to “play the market” use a little bit of money to do this, but put most of their money in a variety of index mutual funds covering small, medium and large companies, with some investments in real estate and bonds.
“It smooths out the highs and the lows,” he said.
Asked how much people should save, Ueland said it depends greatly upon when they start. “Someone in a career will need to save above 10 percent to retire,” he said.
He also noted that he doesn’t expect today’s stock market to match the huge returns it offered before our recent recession. He was guessing that the coming years will have returns closer to 8 percent.
But he still described that as pretty good, especially if people make wise decisions and be patient.
Ueland offered some good tips there. Now all we have to do is follow them.
Mike Benbow: 425-339-3459; benbow@heraldnet.com.
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