Feature

Extra woes for new college grads

And more of the week's best financial insight

Here are three of the week's top pieces of financial insight, gathered from around the web:

Is the 4 percent rule too strict? The man who invented the "4 percent rule" has updated the numbers, said Brett Arends at MarketWatch. In 1994, Bill Bengen, a financial adviser in Southern California, established the principle that "if you want to make sure your retirement savings last at least as long as you do, you should budget to spend no more than 4 percent of the balance in the first year — and then adjust the amount each year in line with inflation." But Bengen now says that this rule of thumb is too simplistic. He devised it as a hypothetical for someone retiring in October 1968, "the worst moment he could find in modern times," just before a 14-year bear market and runaway inflation. Historically, however, "the average safe withdrawal rate has turned out to be 7 percent." Bengen, a retiree himself, said he sticks to a withdrawal rate of 5 percent.

Extra woes for new college grads Recent college graduates are facing bleak employment prospects, said Craig Torres at Bloomberg. "The unemployment rate for young people ages 20 to 24 was 12.5 percent in September, highest among adults." Young workers are typically hit hard during a downturn, but this time is different. The unemployment rate for recent college graduates peaked at 13 percent during the last recession, but job seekers were at least able to build in-person connections. During the pandemic, however, even interviewing in person is more complicated, which could hurt the prospects of young people up against more-seasoned candidates. "Employment rates for those who graduated college in the aftermath of the 2008 financial crisis remained significantly lower" and salaries remained depressed.

Markets fall in love with electric cars What's driving the stock market frenzy around electric-car startups? asked Eliot Brown at The Wall Street Journal. Despite never having sold a vehicle, companies such as Hyliion, Fisker, and Lordstown Motors are "valued at more than $3 billion apiece by investors" hoping to catch the next Tesla. Never before have "so many companies with no revenue pursued public listings at such high valuations." Many are going public by merging with blank-check companies, thus avoiding the scrutiny that normally goes along with an initial public offering. Also fueling the market euphoria is the belief that "regulations in some countries and California" are creating a new market for EVs that older automakers have been slow to embrace.

This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.

Recommended

The daily business briefing: August 2, 2021
Chuck Schumer in Washington
Business briefing

The daily business briefing: August 2, 2021

Bowing to Beijing
Tom Cruise.
Briefing

Bowing to Beijing

Disappointment for sponsors and hosts at Tokyo Olympics
Signs in Tokyo.
Feature

Disappointment for sponsors and hosts at Tokyo Olympics

Top grads are avoiding Wall Street
Wall Street.
Feature

Top grads are avoiding Wall Street

Most Popular

Tom Brady's 'gentle' roast of Trump at Biden's White House: 'Deeply vicious'?
Tom Brady, Joe Biden
Quotables

Tom Brady's 'gentle' roast of Trump at Biden's White House: 'Deeply vicious'?

How sociology shows 'policy makers have been looking at vaccine refusal all wrong'
COVID-19 vaccination.
the coronavirus crisis

How sociology shows 'policy makers have been looking at vaccine refusal all wrong'

Israeli data suggest infected, vaccinated individuals have low chance of spreading COVID-19
Sharon Alroy-Preis.
sunday shows

Israeli data suggest infected, vaccinated individuals have low chance of spreading COVID-19