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SF, where do you think the money will go?
Will these account be handles like 401Ks or IRAs?
I have never really heard where people would place their money. I have heard that there will be several options, but I need information on this. I would like a good source. I use to be against the idea, but after talking to several of my friends who have opted out of the system, I am willing to give it a second look.
I need a good source to read.
DamnYankee
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We had hoped for an honest debate.
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The Almighty
Froggie, it depends on the actual plan, there were several. Some allowed the investments be restricted to two choices, Treasuries and the S&P 500. Other plans said the money could be partially invested in the S&P, but a certain percentage would be restricted to treasuries. Yet another stated that the money could be invested in the same manner as an IRA.
I will see if I can find a good link for you.
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The Almighty
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thanks, I appreciate it.
See if you can find me a link that puts a number on the amount in fees that brokers and the like stand to make through any of the privatization schemes.
My sense is that, rather than shifting to individual risk, we should allow the government to invest a portion of the trust fund in the stock market to attempt to generate higher returns. This way we can gain the benefit of market rates of return without exposing individuals to additional risk.
DamnYankee
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And when the voters find out the truth, they will flood their Congresspersons and Senators with demands to pass reform.
It will pass, and the president will sign it, and we will remind the voters who it was that tried to scare them into opposing it.
It must suck to be you.
It will pass, and the president will sign it, and we will remind the voters who it was that tried to scare them into opposing it.
It must suck to be you.
DamnYankee
Loyal to the end
That's the point; the voters are finding out about it. Which is why guys like Reid are afraid of their chances for re-election.
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The Almighty
1) There is no additional risk when going from 'the individual invests in the market' to 'the government investing the market'. Each has risks the other does not.
2) Fees are charged regardless of who is running the platform. No one is going to do it for free. Either the government pays someone to do so or the individual does.
3) My preference would be to have the Index fund run by a non-profit group for about 0.10%... which given the size the fund would be may even be too high. (actually it would be two seperate funds... one of the S&P 500, the other T-bonds)
4) Even if #3 is not done, investors would still be able to go with either an ETF of the S&P or something like Vanguards Index 500 fund. Both of which are minimal in expenses. SPY (S&P ETF) has an expense ratio of 0.10% and the Vanguard fund is about 0.25% (last time I checked)
1) The holder of the risk is different. In my version the government holds the risk whereas in your version individuals shoulder the risk. Given that SS is an insurance program, not an investment program, individuals should not shoulder the risk.
2) The government could conceivably negotiate better fees as a single entity with lots of funds whereas millions of individuals getting hit with millions of individual fees will be a whole hell of a lot more expensive.
3) I'd be in favor of the government investing a small portion of the trust fund on a going forward basis in an index fund.
4) Again, allocation of risk is my sticking point with individual accounts. In my view, the privatization scheme is just a means to generate shitloads in new fees and new customers for the financial services industry while turning a defined benefit insurance program into an investment program. The financial services industry is on my shitlist for obvious reasons and I don't believe that putting risk on individuals makes sense for an insurance program.
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The Almighty
1) Actually, it simply changes the type of risk to the individual. It does not matter if it is the government that invests the money or the individual, BOTH would possess market risk. That said, I do understand what you are trying to say... you are saying that if the government invests in the market and then it goes bad, the government would still be liable for the funding of SS. So the individual in that case has the risk of the government doing what is says it will do.... and we all know how likely that is.
2) To an extent you are correct, however, the government could still do that without actually managing the fund or the percentages. The government could state... you the individual have the ability to invest in SPY and TLT (these are examples, but more than likely seperate ones would be established for SS). Those fees could be negotiated by the government, but it would be up to each individual as to what percentages go into each fund.... and the individual would control the money rather than the government.
3) ok
4) That is the scare tactic used by those who oppose SS reform. (typically politicians that want to maintain the ability to dip into the SS funds whenever they choose) Again, the individual has risks either way. They either risk the idiots in DC blowing up the funds to the point that there is no SS despite the fact we have been making contributions. Or they control their own accounts and decide if they wish to put their risk/return of their portfolio into the S&P or into Treasuries. Note: anyone under this option could simply go 100% into T-bonds. Which means they would be taking similar risk to what SS does today, yet they would have control of their assets. Even if T-bonds is the ONLY option in privatization, I would take it. Because it is the government control of the money that scares me.