Ever wondered how the leader of the United States managed his personal finances? President Obama was required to disclose the Obama family’s financial accounts in 2009 – shedding light on how he saves, banks, and invests.
Many people are curious as to how the powerful figures, such as our President, manages his banking, investments, and retirement savings. Every year, the White House requires the President to report his assets and income in a document that becomes publicly available. Form SF 278 is the Public Financial Disclosure Report that reveals the where the President keeps his money and how much.
Based on President Obama’s 2009 Public Financial Disclosure Report, this is how he conducted his personal finances:
President Obama held two deposit accounts with Morgan Chase Private Client Asset Management and Northern Trust – both were checking accounts jointly owned with the First Lady, Michelle Obama.
The Morgan Chase Private Client Asset Management checking account held $250,001 to $500,000 while the Northern Trust checking account held $1,001 to $15,000.
Barack and Michelle Obama owned a combined $150,000 to $300,000 in the Vanguard 500 Index Fund and less than $3,000 in the Vanguard FTSE Social Index Fund. In his days in the Illinois Senate, Obama devoted $50,001 to $100,000 in the State of Illinois General Assembly Defined Benefit Pension Plan. Additionally, he owned $100,001 to $250,000 worth of U.S. Treasury Bills in an SEP-IRA.
Children College Savings
President Obama has planned well ahead for the college education of his two daughters, Malia and Sasha, who will be ages 13 and 10 in 2011, respectively. He established two Bright Directions College Savings 529 Plans for each of his daughters that each held $100,001 to $250,000.
The Obamas seem to prefer stashing a large portion of their money in low-risk government securities. They jointly held $500,001 to $1,000,000 in U.S. Treasury Notes and $1,000,001 to $5,000,000 in U.S. Treasury Bills.
*Under Form SF 278 the President had to report each asset held for investment or the production of income which had a fair market value of over $1,000 or generated more than $200 in income by the end of the reporting period.
President Obama’s Well-Planned, Conservative Finances
President Obama’s personal finances follow a solid, very low-risk savings and investing mentality. Taking account that Barack and Michelle Obama are in their late 40s, their risk-tolerance is very much in line with the need for low-risk income-generating assets as they near retirement.
There is nothing much to say about President Obama’s checking accounts. His accounts are held with the private banking divisions of JPMorgan Chase and Northern Trust, which is expected for a man of his stature. Apparently, the Morgan Chase Private Client Asset Management checking account pays a small amount of interest.
The Obamas are investors in index funds at popular investment fund company Vanguard, which is a highly recommended method of investing for those who want a simple, diversified investment portfolio. A fairly large amount of their savings are in government securities that pays a small amount of interest, which may have earned a better return if put in a high-yield savings account. But, U.S. Treasury notes and bills are super-low risk investments.
When he was in the Illinois Senate, Barack Obama contributed to a pension plan which is a tax-deferred account. It’s a great example of how workers should take advantage of employer retirement plans.
The final example set by President Obama is the planning for the college expenses for his two young daughters, who are expected to enter college in next 5 to 8 years. A 529 savings plan is a tax-deferred account dedicated towards funding the college education of the beneficiary. The President may already have enough saved up in 529 plans for a four-year degree at a top ranked college for each of his children.