Labor Day is celebrated in the United States on the first Monday in September. It is the "unofficial end of summer"^[1] and an occasion for picnics, relaxation, and visits with family and friends.

It can be called a national holiday, because it is both a "legal public holiday" under Federal law^[2] (which applies only to Federal employees and institutions) and as a state holiday under the individual state laws of all fifty states.

It was first observed in New York City in September 1882, and was signed into Federal law by Grover Cleveland in 1894.

????By 1907 it was observed in 36 states and the District of Columbia.[1]

"Labor Day differs in every essential way from the other holidays of the year in any country. All other holidays are in a more or less degree connected with conflicts and battles of man's prowess over man, of strife and discord for greed and power, of glories achieved by one nation over another. Labor Day...is devoted to no man, living or dead, to no sect, race, or nation." Samuel Gombers (Dept. of Labor site)

• The History of Labor Day, U. S. Department of Labor
• The Origins of Labor Day PBS
• History Channel
• How Labor Won Its Day, Detroit News]
• Day of Labor, AggieLife (Texas A&M): Labor Day as a European idea
• An Overview of U.S. Holidays, U. S. Department of State: "First observed in New York City in September 1882, the Labor Day holiday commemorates the contributions of working men and women. In 1894, President Grover Cleveland signed legislation establishing the federal holiday. Labor union participation in annual parades remains common, while for many Americans the holiday demarks the unofficial end of summer and beginning of the school year."

Life insurance is a financial product which protects the holder's beneficiaries (usually his or her family) against the financial risk of the holder's unexpectedly dying young.

In its simplest form, "term insurance," the policyholder contracts to pay a small premium every year, say $120 for a $100,000 policy for a 25-year-old. if the policyholder dies during the year, the beneficiaries receive $100,000. If the policyholder, as expected, does not die, the policyholder receives nothing at all. The government's "mortality tables" show that the average American has an American has a probability of 0.000955^[3] of dying. If the insurance company could manage to insure a million 25-year-old on this basis, they would collect $120,000,000 in premiums and would expect to pay out 95,500,000 to the 955 policy holders who died, so they would earn about $25.50 on each policy. Of course, the

From a gambler's perspective, the insurance company bets $300,000 at 1000:1 odds that the policyholder is going to survive. Since

is typically bought by someone who wants to protect his family against the risk that he will die young, while they are still depending on him for financial support, and before he has had time to build up an estate.

In the United States, a 401(k) plan (or simply 401(k) or 401k) is a popular form of retirement account, often available to workers at medium-to-large-sized companies. 401(k) refers to paragraph k of section 401 of the portion of the U. S. Code that authorizes these accounts.

As of 2007, 401(k) plans play a very important role in workers' retirement in the U.S. Social Security benefits, never intended to be the sole support for retirees, serve as no more than a floor or safety net. Traditional pension plans are becoming less common, and 401(k) plans are filling the gap.

401(k) plans are completely voluntary; it is the employer's choice whether to offer one and the worker's choice whether to participate. They are entirely a product of private enterprise. Thus, the details vary widely from one company to another. Often the employer will contract the plan out to a brokerage or mutual fund company.

It is important for workers at companies offering 401(k) plans to understand their company's plan, because it is usually beneficial to participate. Because 401(k) plans represent long-term savings for retirement, there is, however, never any urgency in making the decision.

http://money.cnn.com/2001/01/04/strategies/q_retire_401k/index.htm

In personal investing, asset allocation refers to the mix of different kinds of investment assets in an investment account. The three major asset classes are equities (stocks), bonds, and short-term (cash).

Economic conditions affect different asset classes in different ways. Assets in the same class tend to behave in roughly similar ways.

Short-term assets like money-market mutual funds behave almost like money in the bank.^[4] They grow slowly but very steadily. They are suitable money that may be needed at any time, as they do not have irregular fluctuations and there is never a good or bad time to sell.

Bonds are loans made to the bond issuer, often a corporation. They are considered relatively safe, conservative investments. They grow faster than short-term assets, but their value does fluctuate. Unlike stocks, however, their value does not depend much on the business success of the company issuing them, short of bankruptcy. Their value fluctuates in a complicated way with interest rate, but within narrow limits.

The bond purchaser pays the "face value" of the bond, often $1000. The issuer promises to pay back that principal on a date in the future, called the "maturity," perhaps ten years. Meanwhile, the issuer makes regular interest payments, often four times a year ("quarterly"). If the bond carries an interest rate (the "coupon rate") of 6%, what happens is that the purchaser pays $1000 to buy the bond; the issuer pays the purchaser $15 every quarter for ten years (a total of $600); then the issuer pays back the $1000 in principal.

Bonds pay significantly higher interest than short-term investments. What can go wrong? Not very much. There is always a risk that the issuer will not pay (will "default"). For "investment grade" bonds, this risk is extremely small. Apart from default, the investor knows just exactly much the bond will pay when. The risk occurs if, for any reason, the investor cannot afford to hold the bond until maturity.

Different asset classes are affected by economic conditions in very different ways. Everything in the same asset class has a definite tendency to behave in the same way. For example, the Dow Jones index and the S&P 500 index are both examples of stock-based indexes. Although the differences between the indexes are important to sophisticated investors, by and large when the Dow booms the S&P 500 booms too, and when the Dow tanks the S&P 500 tanks, too.

For example, between the start of Monday, June 4th and the end of Thursday, June 7th, the Dow, the S&P 500, and the NASDAQ—three very different indexes, but all based on stocks—dropped by 3.0%, 3.1%, and 3.1% respectively. Fidelity Aggressive Growth fund dropped 3.5%.

It is important for anyone with a retirement account such as a 401(k) plan or a Roth IRA to understand the basics of asset allocation, because in long-term investing, asset allocation is the most important investment decision. It is much more important to decide on the proportions of the stock/bond/short-term mix than it is to decide on which particular stock funds to hold.

Investors who do not want to deal with asset allocation often have the option of buying "life-cycle" mutual funds, which are recognizable because the fund name mentions a target retirement year (e.g. "Fidelity Freedom 2030," "Vanguard Target Retirement 2035," "Schwab Target 2020," etc.) In these funds, the managers decide on the appropriate asset mix, which changes as the target retirement date approaches.

Short-term assets behave more or less like money in the bank.^[5] Like a bank account, the growth of these assets is slow and steady. The rate of growth will vary with the "prime interest rate." The important thing about them is that they have virtually no fluctuation, so they can be cashed in whenever they are needed. There is no good or bad time to sell them.

Bonds are loans to a company. They (usually) have a stated interest rate and a stated date of maturity. For example,

1. ↑ Labor Day, U. S. Department of State
2. ↑ 5 U.S.C. 6103, Cornell Legal Information Institute]
3. ↑ http://www.cdc.gov/nchs/data/statab/lewk3_2003.pdf
4. ↑ Money market mutual funds, which are not guaranteed by the FDIC, and theoretically they can lose money. Of course, literal money in the bank can be part of an investor's holdings, and banks are more than willing to set up retirement accounts that contain such holdings.
5. ↑ In fact a bank can set up a retirement account whose investments are actual FDIC-insured bank accounts. But the short-term assets in an employee-sponsored 401(k) are likely to be "money market" mutual funds. Theoretically these funds are not guaranteed and theoretically it is possible to lose money in them, but the chances are exceedingly remote.