What the experts say
401(k)s: When to roll over; Debt-free nations; Little fund, big returns
401(k)s: When to roll overWhen people leave their jobs, they often neglect to take their retirement accounts with them, said Carolyn Geer in The Wall Street Journal. At best, tracking and managing old 401(k) accounts “can be minor annoyances,” but they might be worth tolerating if the fees are low. If your ex-employer’s plan is pricey or subpar, however, keeping the status quo can be “downright dangerous.” Consider rolling the funds over into your current employer’s plan, moving the funds to a traditional IRA, or converting to a Roth IRA. With the Roth, you’ll owe income taxes immediately on the amount you convert—but you don’t need to worry about ever paying taxes on future returns.
Debt-free nationsInvestors, politicians, and pundits are ignoring “the most remarkable feature of the global debt picture,” said Shawn Tully in Fortune. Even as sovereign nations in the developed world grapple with mounds of debt, countries such as China, Brazil, and India are “virtually debt-free.” The top 24 developed nations account for about 41 percent of the world’s GDP, land mass, energy consumption, and population, according to Research Affiliates. Yet they carry about 90 percent of the world’s debt. By contrast, the top 46 emerging nations account for 59 percent of the world’s economy but just 10 percent of its debt. This bodes well for investors in emerging nations, where healthy balance sheets will beget higher growth rates and provide “far more flexibility to weather another financial crisis.”
Little fund, big returnsOver the past 10 years, Valley Forge mutual fund has trounced the S&P 500, not to mention most funds in its large-cap value peer group, said Ben Baden in U.S. News & World Report. That’s particularly impressive when you consider that its manager, Bernard Klawans, is an 89-year-old former aerospace engineer who has been running this tiny fund “single-handedly” for the past four decades. “Valley Forge fund has made the pros look like chimps over the last decade,” says Morningstar’s John Rekenthaler. Klawans’ überconservative approach concentrates on a couple dozen household names and he isn’t afraid to play it safe. Back in 2008, he says, “The market stunk, so I got to 64 percent in cash.”