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Moneywise

Cash-strapped states look to troubled pension funds to spur economy

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  • lost in DC West Jordan, UT
    Feb. 11, 2013 9:17 a.m.

    The standard rule upheld by the courts in fiduciary dealings was the “Prudent Man Rule” which said someone investing on another’s behalf should only choose investments that a prudent man would choose if he were investing his own money. It applied to every investment.

    The rule changed over time, and for the last couple decades a new standard has been in place. It is called the “Prudent Investor Rule”. The name did not change to satisfy PC clamorings for gender neutrality, but because the nature of what the fiduciary could invest in changed. The new rule allows the investor to select investments based on an entire portfolio approach, rather than each individual investment.

    Thus, if a prudent investor would risk a small portion of his portfolio in high-risk/high-reward investments, a fiduciary investment manager could do the same. The closer to retirement, the smaller the portion in higher risk investments

    Look at the current income needs of pension funds and see if any can be used for more higher-risk/higher-reward opportunities.

  • worf Mcallen, TX
    Feb. 11, 2013 1:49 p.m.

    Unbelievable how Michael Jackson went from a worth of 500 million dollars to a 250 million dollar debt, prior to his passing away.

    Like wise:

    Our country went from the wealthiest to the most indebted country in history.