“Personal Finance: The lure of emerging markets - Philadelphia Daily News” plus 1 more |
| Personal Finance: The lure of emerging markets - Philadelphia Daily News Posted: 23 Oct 2010 11:59 PM PDT Posted on Sun, Oct. 24, 2010 If you have an emerging-market fund, you might be enjoying investing again. During the last quarter, emerging-market funds, which invest in areas such as China, India, and Brazil, gained 18.6 percent on average, while U.S. stock funds increased 10.6 percent, according to Lipper Inc. And funds that invest in Latin America-based companies climbed 25.9 percent. The gains came as investors around the world worried that the United States, Japan, and Western Europe would remain bogged down with financial stress for years. They sought faster-growing areas of the world. Now, analysts are debating whether investors can continue to count on emerging-market funds to continue their ascent in the near future. JPMorgan Chase & Co. economists recently noted that emerging markets were starting to "feel the developed markets' pain." "Emerging-market export growth is slowing sharply," and "there will be negative feedback on emerging-market corporate and household income," the economists said in a report. Still, analysts are convinced that emerging markets will soar in the longer term as they modernize. Emerging markets represent 37 percent of the world's gross domestic product, and Goldman Sachs Group Inc. is estimating they will be 49 percent by 2020. Consequently, advisers such as U.S. Trust chief investment officer Christopher Hyzy are suggesting that clients allocate 10 percent to 20 percent of their stock portfolios to emerging markets. Here are ways to position yourself over the long run: One-stop shopping. If you want first-time emerging-market exposure and have a diversified international fund, you might have what you need. Check to see if the fund invests in areas such as Latin America and Asia-ex Japan. Look for "ex-Japan" because Japan is a mature area, like the United States, and is expected to grow slowly compared with emerging markets such as Malaysia, Vietnam, and Indonesia. To see what countries your fund selects, use your prospectus, call your fund's 800 number, or go to morningstar.com and use a free-trial subscription. Type the fund name in the quote box, click on "portfolio," and see what percent of the fund goes into which areas of the world. You can get exposure to the entire world, including emerging markets, through an exchange-traded fund such as the iShares MSCI All Country World Index or the Vanguard FTSE All World ex-US Index. Both mimic the world, but the iShares has less emerging-markets exposure and a lot in the United States and other developed areas. About 13 percent is in emerging markets, compared with 30 percent in the Vanguard fund, which invests nothing in the United States. The more exposure you have to emerging markets, the higher your returns will be in good times. But they are more volatile than funds that invest in the United States and can crash hard. In 2008, as the U.S. stock market dropped 37 percent, the iShares all-world index dropped 43 percent and the All World ex-US, with a bigger portion in emerging markets, dropped 47 percent. This year, the U.S. market (Standard & Poor's 500) was recently up 5 percent, the ACWI was up 6.5 percent, and the VEU (Vanguard) was up 9 percent. Emerging-markets focus. If you have funds you like, and they invest in the United States, Western Europe, and Japan, you might keep them and add some focused exposure to emerging markets. Betting on a single country can be risky unless you understand the politics, economy, value of stocks within the country, the effect of currency fluctuations, and the corporate regulatory environment. But you can invest in a wide range of emerging markets through a single emerging-market exchange-traded fund such as the iShares MSCI Emerging Markets fund, which was recently up 13 percent this year, or the Vanguard Emerging Markets fund, which was up 16 percent. Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Fairfax students get hands-on lesson in personal finance - Washington Post Posted: 22 Oct 2010 04:58 PM PDT Lake Braddock Secondary School student Zenat Raza has a problem that an eighth-grader wouldn't expect to encounter for a while: how to budget the $81,085 salary of a 35-year-old single mom with two kids. Taxes eat up $676 a month. Social Security and Medicare payments take away another $338. Then there's the house payment, car note, insurance premiums, cellphone bills and even college to think about. Zenat scans her budget worksheet and realizes the harsh truth. "Going into a big world seems really challenging," the 14-year-old said. There are "a lot of difficulties - a lot of, like, math." The exercise is at the heart of a program developed by nonprofit Junior Achievement and the Fairfax County school system that teaches eighth-graders the basics of personal finance, from the difference between debit and credit cards to calculating compound interest. The curriculum culminates in a visit to a 20,000-square-foot interactive museum called Finance Park that opened this month, where students such as Zenat put their skills to the test. "You are no longer eighth-graders here today at Finance Park," building manager Rachel Wunder told about 100 students on a recent morning. Instead, they transform into adults, with all the financial obligations thereof. Each student receives a life situation that spans the economic spectrum. Some become married couples earning six figures; others are single parents making ends meet. There are students who are single with plenty of disposable income, and those who only thought they had money to spare until they began tackling their budgets. During their day at the park, students visit about a dozen faux stores to purchase a dizzying array of life's necessities, from clothing to college education. They track the rise and fall of their stock portfolios through a prominently displayed scrolling ticker. A few fortunate students get "lucky chances" granting them extra dollars for, say, helping the elderly. Others receive the not-so-happy news that their car broke down or their sunglasses cracked, resulting in an unplanned expense. "Financial literacy is not a fad," Federal Reserve Chairman Ben S. Bernanke said during the grand opening of Finance Park last week. "It is a critical thing for everybody." In a 2008 study by the Jump$tart Coalition, which promotes financial literacy among youths, high school students correctly answered less than half of the questions on a personal finance assessment, down from 52 percent in 2006. Meanwhile, a survey this year by the National Foundation for Credit Counseling found that more than half of adults do not budget their expenses. About a third of adults would give themselves a grade of C or worse for their knowledge of personal finance. The creators of Finance Park said that the Great Recession has spotlighted the need for financial education starting at an early age but that the idea for the program was born well before that. Junior Achievement, a nonprofit group that helps teach students about business, opened its first Finance Park in Tampa in 2003 and has since opened 14 more locations. In Fairfax, the group began by working with schools to incorporate its curriculum into the classroom, followed by a trip to a smaller version of the park that was housed in a trailer. The initiative coincided with the passage of legislation in Virginia that made financial education a requirement for students. The program has since evolved into 20 hours of instruction taught in all eighth-grade math and social studies classes and, of course, the visit to Finance Park. Junior Achievement said it is in early conversations with other school systems, including those in Prince George's and Montgomery counties, about creating similar programs. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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