Home > Uncategorized > Vanguard’s Jack Bogle: Financial ‘train wreck’ looms – USATODAY.com

Vanguard’s Jack Bogle: Financial ‘train wreck’ looms – USATODAY.com

September 3, 2012 Leave a comment Go to comments

Q. A number of commodity-based ETFs aren’t covered by the Investment Company Act of 1940, which regulates most mutual funds, and so don’t have the same protections that most funds do. Do you think investors understand that?

A. Less than 1% understand that. The same is true with exchange-traded notes, which are credit notes. Investors should invest and not speculate.

Q. What worries you most going forward?

A. The coming train wreck in the financial system. A 401(k) is a thrift plan trying to be a retirement plan. It was never designed to be a retirement. To be a retirement plan, you have to keep putting money in and can’t be allowed to take money out, and you can’t be allowed to borrow from it. And if you change jobs, you should be able to take it with you to your new job. The reality is that probably 70% of the citizens of this country will rely entirely on Social Security.

Q. How significant a risk do you think money funds pose to the overall financial system?

A. It’s hard for me to put in the context of the overall economy. It’s certainly one of the major risks in the mutual fund industry. There’s this kind of razor’s edge, and all of a sudden you go over it, and people suddenly want their money at the previous price. It’s just not sound.

via Vanguard’s Jack Bogle: Financial ‘train wreck’ looms – USATODAY.com.

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