“Personal Finance: In 2010, most made a bundle - Philadelphia Daily News” plus 1 more

Personal Finance: In 2010, most made a bundle - Philadelphia Daily News

Posted: 15 Jan 2011 03:57 PM PST

Posted on Sun, Jan. 16, 2011

Open that envelope . . . the one from your 401(k), IRA, college fund, or anything else from your broker. It's bound to contain some delightful news if you did just about anything other than play it safe with cash or CDs last year.

In 2010, it was almost impossible to make a mistake if you plopped money into a stock mutual fund at the beginning of the year and left it there, or if you didn't get scared during the 16 percent plunge in the stock market in the summer and kept adding money. Bond mutual funds also treated investors kindly for the year, although they have been on a nasty streak that's been destroying some gains during the last couple of months.

Despite the fear the last three years, and fretting that the economy would fall back into a recession last summer, investors did extremely well in the stock market, beating historical averages.

If you simply put money into an index fund that mimics the stock market, or the large stocks known as the Standard & Poor's 500 index, your money grew about 14.3 percent, according to Lipper Inc., a firm that tracks mutual fund performance. That is better than the 9.8 percent historical average in large-company stocks tracked by Morningstar Inc.'s Ibbotson Associates Inc. since 1925.

Small companies rocked

If you took a chance in a small-cap stock mutual fund, the average fund would have returned 25.7 percent for the year, as investors followed the typical behavior after an awful recession. Smaller companies tend to be the leaders, as investors start feeling more optimistic about the economy. And small stocks last year far outperformed their average annual gain since 1925, which has been 11.9 percent.

Around the world, small companies were the place to be in 2010. Yet, if you hedged your bets and put money into an international fund that sampled a blend of large and small stocks from all over the world, you would not have made as much money as if you had bet on the United States alone. The average international fund, a blend of stocks from throughout the world, climbed about 10.4 percent over the year, according to Lipper.

Europe, of course, with its worries about debt problems in Greece, Portugal, Spain, Belgium, and Italy, was the world's laggard. Still, the average fund invested only in European stocks climbed about 7 percent.

On the other extreme, China, with an economy growing at 10 percent a year, prompted nervousness as investors wondered whether the government would try to slow down growth somewhat to avoid a bursting bubble. Still, China funds provided a 12.5 percent return.

Time heals the wounds

The year demonstrated clearly that time heals the stock market and the economy, even after the harshest devastation since the Great Depression. Although the economy and, especially, employment still have a distance to go, the full stock market, or what's known as the Wilshire 5000, has climbed about 98 percent and added $8 trillion to people's wealth since the scariest moments of March 2009.

That growth should go a long way to easing the pain of 56 percent losses during the cruel bear market. But getting back to even after such devastating losses takes time, as investors will see if they compare their 401(k) now to where it was in 2007. The Wilshire 5000 still ended 2010 down 14.3 percent from the Oct. 9, 2007, peak. In other words, despite the stock market's returning $8 trillion to investors over the last couple of years, people still have not regained about $3 trillion of their original losses.

If you were scared and decided to stick with gold in 2010, you would have made about 30 percent in the SPDR Gold Trust exchange-traded fund.

Meanwhile, investors who continued to cling to U.S. Treasury bond funds were picking up on warnings of their own. In the last month, investors have lost about 3 percent in the average U.S. bond fund. In a recovery, interest rates are expected to rise, and that means bonds lose value.

Gail MarksJarvis is a personal finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

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Personal finance experts say checking your credit should top your annual to-do list - msnbc.com

Posted: 10 Jan 2011 09:15 AM PST

As the new year gets going personal finance experts suggest you make sure checking your credit is high on your to-do list.

That way if you decide to buy a car, a house or do some refinancing you, not the bank, will catch any mistakes or errors.

"If there is something wrong that's on there, January is a great time to fix that or to work towards fixing that," says MSNBC.com's Bob Sullivan.

Bad credit reports are also a risk for job seekers.

"Most companies now will pull your credit report when you apply for a job with them, and if there's something suspicious on there they'll just move on to the next candidate," Sullivan warns.

Some of the best advice about credit reports, though, is how to get one.

They're free.

AnnualCreditReport.com is the only place you can get your free, Congressionally mandated credit report each year.

That mandate has been in place for five years, but recent surveys have shown only one-third of eligible Americans take advantage of it.

For more Rochester, N.Y. news go to our website www.whec.com.

Personal Finance

Monday, January 17, 2011