Published By Banyan Hill Publishing | | | | Published By Banyan Hill Publishing | | | | The Key to Your Future Retirement By Charles Sizemore
Chief Editor, The Banyan Edge | Banyan Nation, What’s the most important pool of capital for America’s future retirees?
It’s not all that exciting, but it is crucial to your investing plan, no matter how old you are.
And it’s your 401(k).
Now, in its Participant Pulse report this week, Bank of America did a deep dive on America’s 401(k) plans…
BoA’s findings gave me both hope and heartburn.
But let’s start with the good news!
The average American 401(k) plan had a balance of around $82,300 as of the end of June. That’s a nice jump from the $75,505 at the end of 2022. A strong first half to the year help repair the damage of last year’s bear market.
At just shy of 10%, the recovery lagged with the performance of the S&P 500. But that’s a good thing, because it means that on average, 401(k) plans are invested in more balanced portfolios.
We wouldn’t want to see the bulk of your future retirement completely at the whim of the market!
And the average contribution rate was 6.5%. For most participants, that’s going to be high enough to at least get full employer matching. I’d like to see this number be a little higher, but all things considered, it’s not too shabby. The Problem With Averages Here’s the rub. If you stick your head in the oven and your feet in the freezer, your body temperature might look great “on average.” But it’s not going to be pleasant.
And that brings me to the not-so-good news…
More Americans are borrowing from their 401(k) plans, and are having a hard time paying back their loans.
As of the end of June, 2.5% of all participants were currently borrowing from their workplace plan. That might sound small, but it’s a 20% increase over the number with loans (as of the end of the first quarter). And of those borrowing, 13.9% were in default on the loan. Gen X Has a Borrowing Problem My generation (Generation X) had the highest percentage of participants with loans at 22.8%.
This is particularly disturbing to me because the Gen X-ers are entering (in theory!) the prime earning years of their career.
These people are in their late 40s and 50s. They shouldn’t be raiding their retirement funds. It’s one thing if a 21-year-old new hire does it, but a very different thing for someone in their 50s. One is just getting started and doesn’t likely have a lot invested anyway. The other should be well on their way to building a retirement nest egg.
Perhaps worst of all, the number of participants taking hardship distributions — or taking money out of the plan for an economic emergency — is up 36% in the past year.
Hey, I get it. Inflation has been unrelenting, and so many people have been forced to look for cash in places they’d probably prefer not to look.
But it’s a sign of desperation. And when you add this to other trends I’ve been following, such as rising credit card debt and the pending resumption of student loan payments, it means we have a real problem.
Does all of this point to a recession ahead? Maybe so. We’ll know soon enough.
But for me (and hopefully for you), the takeaway here is simple enough. If we do have a rough road in front of us, you’re going to need be choosy about how you invest.
Focus on quality, and don’t be afraid to take a more proactive approach with your trading strategy. You want to stay nimble and strategic.
And this week, The Banyan Edge team has been delivering opportunities to do just that. | | | Randy’s company may trade like a stock, but it exists in a world of its own. Instead of a shareholder, you become a unitholder — a silent partner in the company — for as little as $25 a unit… Click here for details. | | | Weekly Recap  - China Deflates While U.S. Inflates
Unlike the U.S. right now, China’s not experiencing inflation. They’re actually going through deflation, or a slow decline in prices. Deflation is a central banker’s nightmare, and the hardest problem for an economy to contend with. Might China’s deflation be a harbinger of things to come?
- Next AI Disruption, New Trade [Ticker Inside!]
Artificial intelligence isn’t just for high-tech companies. AI is reigniting industries that are long overdue for an upgrade. It’s helping our farmers grow our food with better quality and more efficiency. It’s helping doctors diagnose and detect cancer earlier. And AI’s next big disruption? The construction industry.
- Oil’s Moving Higher: 3 Ways to Profit
Oil is going to move higher. Whether it be tomorrow, next month or next year. Too much demand chasing too little supply equals higher prices. It really is that simple.
Over the past six weeks, crude oil prices have soared more than 24%. That’s the biggest jump we’ve seen since January 2022, in the lead up to Russia’s invasion of Ukraine. And it’s just getting started. Here’s how you can get in on this massive investment opportunity.
- Why Buy-and-Hold Investing Isn’t Enough
Think you want to buy and hold like Buffett? Spoiler alert: Buffett actually does a lot of selling. He buys dozens of stocks. Most don’t become top 10 holdings. He sells when the stock doesn’t follow his plan.
Having rules in place (and knowing when to sell) is the key to keeping your losses small and manageable, and giving your winners room to run.
- Learn to Love “Boring” Stocks
Sterling Infrastructure (Nasdaq: STRL). You’ve probably never even heard this stock’s name before. Yet, it’s outperformed nearly every mega-cap tech stock that gets mentions on CNBC every hour of every single trading day.
And it racked up nearly 400% profits in the past three years for Green Zone Fortunes subscribers. Here’s how you can invest in stocks just like this.
Stay Tuned for the Monday Podcast! 🎧  If you like sports and you like data — and you like data about sports most of all! — be sure to tune in to The Banyan Edge Podcast on Monday.
Our resident walking sports almanac Matt Clark (and chief research analyst over at Money & Markets), is joining me to talk about psychological biases, and how they can lead to poor decisions in both sports and in investing.
If you liked Moneyball, you’ll love this.
Until then,
Charles Sizemore
Chief Editor, The Banyan Edge | | | Because of Statute 26-7704 — a nearly forgotten law enacted by Ronald Reagan — $17.9 billion in MLP Checks will be paid out to patriotic American investors this year. Click here to see how. | | | Get The Banyan Hill App And start experiencing that "total wealth" freedom for yourself. | | | (c) 2023 Banyan Hill Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Banyan Hill Publishing. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 866-584-4096) Legal Notice
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