The Obama Portfolio

Carla Fried looks at President Obama’s portfolio:

Ben Bernanke might not be ready to raise the federal funds rate just yet, but the Obamas sure seem to be anticipating bond rates heading higher (and thus prices taking a fall). They report having between $1.1 million-$5.25 million invested in Treasury bills and another $1 million to $5 million in Treasury notes. T-bills have a maximum maturity of one year, while T-notes have maturities between 2 and 10 years. There were no longer-term bond holdings listed. Maybe it’s just easier and patriotic to stick with Treasuries when you’re the Obamas, but if your household taxable income was north of $1.3 million in 2010, as the Obamas’ was, you should probably give tax-exempt municipal bonds a look see.

Even presidents need a personal emergency fund. The Obamas reported having between $250,001-$500,000 sitting in a checking account at JP Morgan Chase Private Client Asset Management account. They also stated that they earned less than $1,000 in interest on their checking account. Even if we assume they are closer to the $250,000 side of that range, that amount of interest sounds incredibly low. If the President and First Lady followed the advice of MoneyWatch’s Allan Roth, they could have earned triple that amount on their cash.

I may be the leader of the free world, but when it comes to stocks, I invest passively. The Obamas report having between $200,000-$450,000 invested in the Vanguard 500 Index Fund. Clearly the Obamas are hip to cost controls within their own financial lives. The annual expense ratio they pay is 0.06 percent, since with more than $10,000 invested, they qualify for Vanguard’s lowest cost Admiral share class. That means they spend about 1 percentage point less a year than do investors in the average stock fund, a huge advantage when you consider that plenty of folks are telling us we’ll be lucky to earn 5 or 6 percent a year from stocks in the coming years. Too bad neither the Obama administration nor the folks on Capitol Hill have seen their way to make it law that every 401(k) must offer participants at least one low-cost index fund.

Posted by on May 19th, 2011 at 12:02 pm


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