Frugal Village Forums banner

1 - 6 of 6 Posts

·
Registered
Joined
·
19 Posts
Discussion Starter #1
I don't know if any of you have read the new president initiative about myRA accounts: How Obama's 'myRA' retirement accounts will work - Jan. 29, 2014

They offer 0 risk (unless you believe the U.S. government will collapse), they work much like a Roth IRA but your principle investments will be backed by the government. So you cannot lose your principle. You won't be making big returns. You will be making somewhere between 1% and 4%. Anyone thinking of participating in these myRA plans as a part of your investment strategy?

For myself, I think I'll pass on the meager returns, but for others, it might be good for diversification.
 

·
Moderator
Joined
·
4,028 Posts
I don't like the idea of "loaning" the government my money with such meager returns that I wouldn't be able to touch until ???

If our gov was more proficient and not so wasteful, I would feel better, but they have mismanaged the budget for decades... DECADES!
 

·
Registered
Joined
·
2,038 Posts
Not a fan myself, as you must be invested in government bonds. But- I am happy to see an incentive for people to begin saving, even if a little bit. I think most investment firms require at least a $25 deposit each time, after you've opened an account, and sometimes you have to start with far more than that to even open the account for a ROTH or trad. IRA? (I've forgotten the exact details, as ours have been established for a while) The fact that deposits can be as little as $5 is good, though I think it will be a mixed bagged for folks. Some will say, "$5?? I can do that!" and jump right in, where others are not going to believe that $5 at a time will ever get them anywhere, so they won't bother. I will be keeping my ears open for statistics about this down the line, as I am curious to know if it is making a difference in getting our country's population to save more for their future.
 

·
Registered
Joined
·
1,058 Posts
I'm not a fan. From my reading, the buyer would accumulate these $25 "bonds" until they get to $1000 and then the money goes into an IRA. I guess the details aren't clear yet. I also read that there will need to be some Congressional action to make the program fully viable - I forget what Congress has to do but they do need to pass some laws.

In one article I read that some low percentage (10%? 30%) of people who have 401ks available to them through their employer actually participate. Why? I'm guessing that budgets are so tight they don't think they can afford to fund their retirement. I know I've been in that position.

And, of course, this relies on an employer's participation. People who are unemployed, on welfare, on disability or just independently wealthy won't be using this vehicle to save. The first three categories may end up living solely on SS income in their elderly years - a bleak possibility.

Then again, I pine for the days when all employees could easily buy US savings bonds through payroll deduction. Why did that program ever go away? As a matter of fact, buying savings bonds through a regular bank is becoming increasingly difficult, too. I would love any change that makes purchasing US treasuries easier.

In the end, I don't think people are highly motivated to save when they are already struggling to pay for groceries, housing, medical care and gasoline.
 

·
Registered
Joined
·
504 Posts
I haven't read about it accept here. I think it might be a good vehicle for people who might not otherwise save anything. We'll see as all the details come out.
 

·
Registered
Joined
·
895 Posts
I am having the idea that part of the idea is to loan money from the own citizens. The Belgian Federal Interim government did this in 2011 with big success. But Belgium has one of the highest savings rates of Europe, the financial issues were due to political problems and we had quite a nice return at that moment. Somehow I don't see the US repeating that effort.
 
1 - 6 of 6 Posts
Top