Negative Returns, Positive Asset Growth, Long Term Care, etc.

SLOPPY FOURTH QUARTER; According to Morningstar, the average returns by mutual fund category for the fourth quarter of 2007 were:
taxable bonds: +1.3%
municipal bonds: +0.5%
international stocks: -0.8%
U. S. stocks: -2.8%
SLOPPY WEEK: For the week, the Dow declined -1.5%, the S&P 500 -0.75%, Nasdaq -2.6%, and the Russell 2000 -2.4%. Year-to-date, the Dow is now down -4.9%, the S&P 500 -4.6%, Nasdaq -8.0%, and the Russell 2000 -8.0%.

GROWING RETIREMENT ASSETS: According to a recent study by the Investment Company Institute, total U.S. retirement assets climbed to $17.4 trillion at the end of the second quarter of 2007, up from $16.7 trillion at the end of the first quarter of 2007. Retirement savings account for almost 40 percent of all household financial assets in the U.S.. IRAs held $4.6 trillion at the end of the second quarter of this year, up from $4.4 trillion at the end of the first quarter. Mutual funds manage 47 percent of IRA assets. Americans held $4.4 trillion in all employer-based defined contribution retirement plans, of which $3.0 trillion was held in 401(k) plans. Those figures are up from $4.2 trillion and $2.8 trillion, respectively.

LONG TERM CARE COSTS: If you wonder what the costs of long term care are in your area (they vary wildly), check this website: https://www.ltcfeds.com/ltcWeb/do/assessing_your_needs/costofcare?action=costofcare. Some of the findings (still using 2006 figures):
United States: $194 per day
Greater Philadelphia: $227 per day
Stamford, Connecticut: $341 per day
Wilmington, Delaware: $208 per day
Bridgewater, New Jersey: $253 per day
Wyoming: $157 per day
CREDIT CARD DEBT ON THE RISE: The Federal Reserve reported this week that outstanding revolving consumer credit hit $937.5 billion in November, up 7.4 percent from a year earlier. The annual growth rate has now been above 7 percent for three months running, the first such stretch since 2001. The surge in credit card may reflect the fact that it has gotten harder for consumers to borrow against the value of their homes, both because home values have fallen in many markets and because mortgage lending standards have tightened.

NICE SEVERANCE DEAL: According to the LA Times, Countrywide CEO, Angelo Mozillo, is going to walk away with a severance package of $110 million after the sale of his company to Bank of America for $4 billion. At it’s peak in February 2007, Countrywide had a market value of nearly $26 billion.

Have a great week.

Doug

Douglas R. MacGray, J.D, C.F.P.®, C.E.A.®
Senior Vice President, Financial Planning
EGE Advisors, Ltd.