We're expecting choppiness in labor market due to uncertainty around tariffs: Vanguard's Joe Davis
Joe Davis, Vanguard chief economist, joins 'Closing Bell Overtime' to talk the bond market, the impact of fiscal policy, what to expect from the Federal Reserve and more.
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The Best $7,000 TFSA Investments for Different Age Groups
Written by Tony Dong, MSc, CETF® at The Motley Fool Canada Your age matters more than you might think when it comes to investing. That's because your time horizon, which is how long you plan to keep your money invested before needing it, helps determine how much risk you can realistically take on. When you're younger, you have time on your side to recover from downturns, so you can afford to prioritize growth. As you get older, your risk tolerance typically declines, and you begin to shift toward income generation and capital preservation. Fortunately, there are exchange-traded funds (ETFs) that do this work for you. They're called asset allocation ETFs, and they automatically split your investment across Canadian, U.S., and international stocks and bonds based on a target mix. They're simple, diversified, and cost-effective. Each of the Vanguard options below comes with a low 0.24% management expense ratio (MER). Here's how I'd invest a $7,000 TFSA contribution based on your age bracket and financial situation. If you're in your 20s or even early 30s, you likely have no immediate plans to withdraw from your TFSA. Your biggest financial priorities might be student debt, saving for a home, or building wealth over time. Retirement is decades away. That means you have the longest time horizon and can afford to stomach short-term volatility in exchange for higher long-term returns. For this group, I like the Vanguard All-Equity ETF Portfolio (). It holds nearly 100% stocks split across Canadian, U.S., and international markets, including emerging markets. It's fully growth-oriented, which is exactly what you want at this stage. No need to mess around with single stocks or multiple funds – VEQT gives you all the equity exposure you need in one ticker. Once you're in your 30s or 40s, your situation tends to shift. You may have a mortgage, kids, and more financial obligations, which can make you less tolerant of wild swings in your portfolio. At the same time, you still want to grow your investments, because retirement is likely 15–30 years away. A good middle ground here is the Vanguard Growth ETF Portfolio (), which targets an 80% stock/20% bond mix. You still get the benefits of equity growth, but with some cushion from bonds to reduce downside risk during market corrections. It's ideal for investors who want long-term upside without going all-in on risk. As you approach retirement or begin drawing income, preserving capital becomes just as important as generating growth. You can't afford major drawdowns that could set you back years. Your goal now is steady returns, reduced volatility, and reliable income. The Vanguard Balanced ETF Portfolio () fits that profile. It holds 60% stocks and 40% bonds, providing a smoother ride while still offering moderate growth potential. VBAL is perfect for anyone within 10–15 years of retirement who wants peace of mind and simplicity from their TFSA. The 60/40 strategy has been used for decades, and aside from years like 2022, continues to hold up well today. The post The Best $7,000 TFSA Investments for Different Age Groups appeared first on The Motley Fool Canada. Before you buy stock in Vanguard Balanced Etf Portfolio, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Vanguard Balanced Etf Portfolio wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Fed chief Powell is starting to worry about the reliability of economic data
Jerome Powell raised concerns over economic data quality affecting Fed policy. Budget cuts and staffing shortages at the Bureau of Labor Statistics impact data accuracy. Increased data imputations may lead to misleading inflation and employment figures. For a Federal Reserve operating with a data-driven approach to monetary policy, what happens when the data is wrong? Chairman Jerome Powell has been receiving rising pressure from President Donald Trump — and more recently, other Fed officials — to cut rates, but there's another issue that Powell's worried about: the quality of economic data collected by the Bureau of Labor Statistics. Economists have been raising concerns about this topic for the last few months, and Powell voiced his own concerns on Tuesday during his testimony to Congress. "I wouldn't say that I'm concerned about the data today, although there has been a very mild degradation of the scope of the surveys," Powell said when Rep. Sam Liccardo asked him about his thoughts on data quality. "But I would say the direction of travel is something I'm concerned about." "It's really important not just for the Fed, but for Congress and for businesses, frankly, to know what really is going on in the economy," Powell continued. "I don't like to see the kind of stories I'm reading and the idea being that the data is going to become more volatile and less reliable. That'll make it more difficult for the private sector and for you and for us. That means inflation, employment, and other economic measures that the Fed and other institutions depend on to determine policy might be less accurate than they were in the past. DOGE cuts on government funding could be a culprit. BLS was not spared from budget cuts earlier this year, and a proposal in Trump's Big Beautiful Bill is aiming to further reduce the agency's budget by $56 million. Staffing shortages at the BLS have resulted in reduced data availability. BLS teams calculate CPI numbers by collecting price quotes across 75 urban areas in 200 item categories. On June 16, BLS announced it had suspended data collection in Buffalo, NY. This follows the agency's April suspension of CPI data collection in Lincoln, Nebraska, and Provo, Utah. BLS said the number of imputations, or estimated values, in CPI data increased in April due to these changes, but affirmed that these exclusions have an overall "minimal impact" on inflation data. Torsten Sløk, Apollo's chief economist, pointed out that imputations have increased significantly in the last few months, reducing data quality. Usually, around 10% of the CPI values are imputed when data is not available. However, the May percentage is estimated to be triple the average, at 30%. "In other words, almost a third of the prices going into the CPI at the moment are guesses based on other data collections in the CPI," Sløk wrote in a note last week. This could be leading to more frequent revisions of economic data, experts say, and the labor market is another area of scrutiny. The May jobs report showed 139,000 new jobs created, but both Peter Berezin, chief global strategist at BCA Research, and Samuel Tombs, chief US economist at Pantheon Macroeconomics, believe the final number could be revised down to around 100,000. Increased imputations can mask new developments in the economy, making inflation and jobs data look more optimistic than they actually are. In Tombs' opinion, the jobs numbers are excluding a large swath of the economy: small businesses, which are filing late as they struggle with tariff impacts. "When there's a gap in the data, [the BLS] just interpolates from past trends, but if the trend itself is weakening, once you actually get the data that you previously had interpolated, usually you find that it's weaker than your original estimate had suggested," Berezin told Business Insider. "The response rate to these surveys is very low, so the Fed has to do a lot of guesswork. And in a weakening economy, usually you're going to be guessing too high on payrolls, rather than too low" Berezin added. Read the original article on Business Insider
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Does your 401(k) balance stack up against the new national average?
Is how America is saving for retirement in line with how you are saving? Vanguard's 'How America Saves' report on the state of 401(k) participation is now in its 24th year, and for the moment, all the trend lines are pointing up. That's good news for the most part, but there are some cracks beneath the surface. While 401(k) savings rates and balances are up, so are hardship withdrawals. First, the positive: The average 401(k) balance among nearly 5 million accounts in Vanguard's data set was $148,153, up over 9% from the year before. The average participant rate of return was 13.7%. The average employee percentage of salary contributed, known as the deferral rate, was 7.7%, and when combined with employer contributions, it was 12%. My job is offering me a payout. Should I take a $61,000 lump sum or $355 a month for life? 'He doesn't seem to care': My secretive father, 81, added my name to a bank account. What about my mom? Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. I'm 75 and have a reverse mortgage. Should I pay it off with my $200K savings — and live off Social Security instead? Coinbase's stock sees a 'golden cross.' Why it may not be a bullish signal to buy. Perhaps the best news of all is that the proportion of participants who increased their contribution rate rose to 45%, with 29% automatically increasing and 16% taking active steps to increase. 'One might expect to lose ground in tough years, but we're seeing one positive year following the other,' said David Stinnett, head of strategic retirement consulting at Vanguard. 'That's attributed to automatic plan designs that provide this suit of armor around the 401(k) system. It's a very positive thing to see.' Despite the rosy general picture, when you dig down deeper, there are some issues to be concerned about for retirement savers. The 'average balance' measure among so many participants can be deceptive because it includes many so-called 'super savers,' who max out all the available options to them, plus older and higher-paid employees. If you measure by the median, which is looking at the middle of the pack, the numbers are lower. Median 401(k) balances were only $38,176 in 2024, with a participant contribution rate of 6.8% and a combined rate with matching of 11.5%. During the year, 8% decreased their contributions and 2% stopped them altogether. Another area of concern is withdrawals. Some 80% of plans allow loans, and consistently in the past five years, 13% of participants have had an outstanding loan balance. Withdrawals have been going up in recent years, however. Some 4.8% of participants took hardship withdrawals and 4.5% took non-hardship withdrawals in 2024, up from 1.7% and 3.4% in 2020, respectively. That reflects both worsening economic conditions and loosening restrictions on withdrawals. It also may reflect the degree to which the automatic plan enrollments are working, because plans now include many more low-income workers than previously. 'It's not necessarily bad,' said Stinnett. 'This includes many lower-income workers who would have been experiencing hardship before, but they weren't in the data because they weren't in the plan before.' For the most part, 401(k) participants stick with the hand they are dealt. Almost 90% of plans offer an automatic deferral into a managed target-date fund pegged to the participant's age, and most just stick with that. While the average number of investment choices that plans offer is 17.5, people make an average of just 2.3 choices, and 59% are using a single target-date fund. Only 7% of the 5 million participants surveyed were exhibiting what Vanguard called 'extreme participant asset allocations,' which means they were invested 100% in either equities or fixed-income options. Only 5% took part in any sort of trading during the year. 'Trading activity in 2024 remained at the lowest level in nearly two decades,' Vanguard noted. Women tended to be more conservative and less active than men overall when it came to 401(k) investing. They traded less frequently, Vanguard found, and were more likely than men to hold a single target-date fund. This is not a bad data point, Stinnett said. 'We see some very positive things across the board as it relates to women investors: strong saving behavior, saving at higher levels, and yes, from an investing standpoint, they tend to invest in target-date funds and tend to trade less. But the target-date fund offers such a great solution for people because it covers all the bases.' Among super savers, only 14% maxed out their 401(k) contributions to the statutory limit of $23,000 in 2024. Only 16% of those eligible made catch-up contributions, which allowed people 50 and older to contribute an additional $7,500 in 2024. Starting in 2025, those between 60 and 63 can contribute up to an additional $11,250, but given these numbers, utilization is likely to be low. Only 18% of participants used the post-tax Roth 401(k) savings feature now offered by most plans. And only 10% used the after-tax contribution feature, which allows participants to make extra contributions above the $23,000 limit and then usually convert them immediately to Roth funds in a backdoor conversion move. 'The takeaways for me are positive,' said Stinnett. '2024 was a very strong year for equity markets, and that's an important tailwind. But we're already seeing similar good behavior halfway through this year, and it's been choppy in the markets.' Got a question about investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write to me at . Please put 'Fix My Portfolio' in the subject line. You can also join the Retirement conversation in our . 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