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Rising bond rates give and take

Uh-oh. The headlines are bewailing the fact that interest rates are rising in the bond markets. This could be trouble.

Of the many factors that influence stock prices, bond interest rates have the most influence.

Rising rates make it more expensive to borrow, and companies paying more money in interest have less profit dropping to the bottom line. Homeowners with adjustable rate mortgages have less money to spend on "stuff."

Market rises 'on a wall of worry'

We all need a friend in the box business.

Mine happens to be John Tatum, whose collection of companies includes a fully-automated corrugated cardboard assembly line that operates like something out of Willie Wonka and the Chocolate Factory.

A slurry of recycled paper at one end comes out as fresh new cardboard about 100 yards away. John says that cardboard box sales are slowing down, and that's a forward indicator of future economic conditions.

Here comes private equity

How do they rip us off? Let me count the ways.

Who is the "they" in they? Call it what you will; the Establishment, Big Money, guys waiting to tee off at a restricted country club.

And then there's today's granddaddy of them all, "private equity."

Private equity is coming out of the woodwork these days and snapping up major chunks of publicly-owned corporate America. This is not all bad, I hasten to say, but here's the rub.

Mr. Refund, meet Mr. 401(k)

"King Kong vs Godzilla" is a cult classic movie of the 1960s.

I was reminded of this film when my column last week on automatic 401(k) enrollment prompted a call from Mike Kolar, a Chicago CPA who has pioneered a seamless electronic tax refund program known as "Mr. Refund" offering a better mousetrap for taxpayers filing electronically.

McDonald's, GM and other large companies as well as the Army have adopted the program, but its use is voluntary on the part of employees.

Investing theorem not good fit for all

The revolving drum of a cement-mixing truck had the slogan "Find a need and fill it." And I thought about how the proliferation of so-called "life-cycle" funds from the mutual fund industry could be a reflection of the same thought process.

Life-cycle funds represent an opportunity to put retirement investing on automatic pilot. The assumption is that people should have more money in bonds, as opposed to stocks, when they approach retirement.

Keep the right stock/bond mix

What exactly will happen when we start living on our savings to support that eccentric personal lifestyle to which we all look forward?

When that day comes, we will typically have two types of money. First will be retirement plan money in IRA or 401(k) accounts. The rest will be so-called "after-tax" money that could have come from home equity available after downsizing. We might have inherited some money or sold a business.

A few of us may even have a conventional savings and investment account resulting from the practice of self-discipline and living like a monk.

Put a lid on costs for 401(k) plans

What this country needs is a $1 war tax on gasoline, but that is politically unacceptable.

The thought of a 33 percent increase in gas prices drives voters nuts. However, about 50 million 401(k) participants are experiencing about a 20 percent increase in their 401(k) costs every year, and until recently, we weren't hearing a peep out of them.

Unlike the gas pump's scrolling dollar signs, the 20 percent increase is a silent killer of retirement plan values. Nobody ever receives a bill or writes a check for this ever-increasing cost.

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