Hey, kids. Uncle Sam has a new investment offer for you. Even if you have several decades of productive work ahead—and thus a long investing time horizon—the White House wants you to consider a retirement plan that will invest in nothing but U.S. government debt.
Any financial professional who advised a young investor to avoid stocks and corporate bonds—and everything else except Treasury bonds—would be sued for malpractice. But asset allocation is merely one of the problems with the new “myRA†fund rolling out from the Treasury this month.
A form of Roth Individual Retirement Account that allows people to save after-tax dollars and watch them grow tax-free until retirement, the new myRA offers a single investment option. It’s a private version of the G Fund that is available to federal workers and has lately been delivering annual returns of about 2% on its portfolio of Treasury securities.
Intended for those who haven’t started saving for retirement, don’t have a retirement plan at work, and make less than $129,000 per year ($191,000 for married couples filing jointly), the myRA requires no minimum investment to open an account and promises no fees for investors.
Readers will recall President Obama ’s announcement of this program in January’s State of the Union address. Mr. Obama said that he would direct the Treasury to create this new retirement plan, which was puzzling because such plans are normally created by law, not Presidential order.
Congressional staff were as puzzled as anyone and wondered how the White House would justify the creation of this new savings vehicle. Or perhaps Team Obama would seek new authority from Congress? Well, Treasury is now offering these accounts and has hired Texas-based Comerica to manage them with a partner, Fidelity National Information Services . But the executive branch received no new authority from Congress this year to launch the program.
http://www.wsj.com/articles/investing-in-the-obamafund-1419898857
