The new Federal Reserve Chairman, Ben Bernanke, disclosed his financial information yesterday, which was decidedly conservative. Keeping in mind that only broad ranges of holdings values are disclosed, Forbes reported that "the value of his assets last year totaled between $1.12 million and $2.41 million," with holdings in no-frills investments, including U.S. Treasury securities, mutual funds and annuities. And no, he held no individual stocks in 2006. In fact, his largest holdings were in two annuities - TIAA Traditional and CREF Stock Large Cap Blend.
Bernanke draws an annual salary of $186,600 for his role in the Fed, as well as textbook-royalty income of $100,002 to $200,000 for two textbooks written in his many years in academia. Investment income came to between $136,500 and $318,000.
Now if that wasn't interesting enough, here's what got me:
"The only liability listed on the form was a 10-year student loan, taken out last year at an interest rate of 7.9 percent. Bernanke has two children - one son and one daughter."
Wha? Why? Who?!?
I don't understand. Bernanke, obviously conservative with his personal finances, didn't take advange of any instruments to aid in saving for his kids' college education? Or was he not conservative enough in his savings? Did he have a 529 plan, which Money magazine espouses so unabashedly? I'd love to know more details behind his reasoning for taking out these loans. Having taught at Princeton, he had to have known the costs for college, whether community or Ivy League.
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2 comments:
529 plans have only been around since 1996 and didn't come into vogue until 2001 due to the Economic Growth and Tax Relief Reconciliation Act of 2001, which changed them to be exempt from tax.
There's no way he had enough to pay for college in his 529 plan given the cost of education these days (if indeed he had a 529.)
That's interesting. I didn't know it was so recent, though I must admit that I only recently started to pay attention.
That said, a few more points:
-with the conservative nature of Bernanke's investments, is he earning that much more than the 7.9% interest rate, which seems rather high to me?
-does he have a roth IRA or traditional IRA, both of which can be used to pay down educational expenses?
-do his kids have any school loans? While my husband and I are serious about education, we both paid for our college educations (more on that later), which really helped us appreciate the value of learning. I've known several people who coasted through school because it was paid for, but it's debatable as to whether or not they gleaned as much as those who had to struggle a bit for it.
I'm not arguing that he doesn't know what he's doing with his personal finances. On the contrary. I'd just like to know more behind his analysis and eventual decision on taking out this loan.
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