Saving for retirement can be intimidating, but it doesn’t have to be. Finding reasons not to contribute to your retirement plan will hurt you in the future.
Do any of these excuses sound familiar? July 2015 Employee Memo
Saving for retirement can be intimidating, but it doesn’t have to be. Finding reasons not to contribute to your retirement plan will hurt you in the future.
Do any of these excuses sound familiar? July 2015 Employee Memo
In May, the Supreme Court of the United States (the “Supreme Court”) published its long-awaited opinion in Tibble v. Edison International. The Supreme Court held that an ERISA fiduciary has a duty to continuously monitor the prudence of investment options offered under a qualified retirement plan, separate and distinct from their duty to prudently initially select investment options. While the Supreme Court’s brief opinion clearly dictates a fiduciary’s responsibility under ERISA to review investment options on a continuing basis, it did not express an opinion on the scope of such a review. July 2015
Ball of Confusion (That’s What the World is Today)
The Temptations had a hit single by this title in 1970. Forty five years ago they were commenting on the state of the world at the time. It appears their observations are still relevant today. Hot wars and Cold wars, nuclear proliferation, social unrest, political corruption and economic disruption were daily headline themes confronting and confounding investors. The more things change the more they stay the same. Newsletter 6-30-2015
June’s employee memo is simple overview on investment diversification and asset allocation.
1 | Different assets play different role
While stocks have significant appreciation and wealth-building potential, bonds can generate steady income. Cash can buffer the effect of market losses, while alternative investments can help improve a portfolio’s diversification potential. June 2015 Employee Memo
Since the launch of the first target date fund (TDF) in 1993, its story has been an elegant and simple one-select the date around when the participant plans to retire and the fund will take care of everything. As the retirement date approaches, the TDF will rebalance to a more conservative mix, and manage that mix not only into retirement, but throughout it as well. The TDF is a “one stop shop” where the participant can “set it and forget it.” It was that easy; pick a fund corresponding to the participant’s retirement date and they were done. If only it were that simple. June 2015
May’s employee memo is brief overview on retirement plan loans and a few of the drawbacks on using that feature.
“Although you may have the ability to borrow money from your retirement plan in the form of a loan, please proceed with caution! If you borrow from your retirement account, you may end up causing harm to your financial futures.” May 2015 Employee Memo
There has been much publicity about active managers’ inability to beat their benchmarks over the years. However, upon closer inspection, funds that have remained truly active have shown ability to add value above their benchmarks. A study conducted by Yale professors Martijn Cremers and Antti Petajisto set out to find variables that could help predict fund performance. One variable was active share, which measures a fund’s percentage of holdings that differs from the benchmark index. For example, an index fund has an active share of zero percent and an active fund with no benchmark overlap has an active share of 100 percent. They found that active share is predictive of excess returns. Their study showed that funds with the highest active share and moderate tracking error outperformed by about 1.5 percent per year on average while funds with the lowest active share underperformed by a similar amount.¹ May 2015
April’s employee memo is brief overview on “When should I Take Social Security benefits?” There a quite a few factors involved and this handout touches on a few of them. April 2015 Employee Memo
Investment returns in 2014 were modest and mixed and it appears 2015 may also deliver mixed returns but with a different cast than 2014. US stocks did reasonably well, though most of the returns were concentrated in larger capitalization stocks. The majority of the gains were delivered by a relatively few companies and a relatively few industries. Apple Computer and Biogen helped the larger capitalization indices such as the S&P 500 and the NASDAQ, but not so much Exxon-Mobil or Caterpillar. Smaller companies barely delivered middling single digit returns. This year’s modest mix appears to be changing. Newsletter 3-31-2015
On February 2, 2015, President Barack Obama released the Fiscal Year 2016 Budget of the U.S. Government that reflects a focus on raising overall government revenues. The prospective increase in revenue would create a range of new tax benefit programs, many of which would affect retirement savings for as many as 30 million Americans. According to the White House, as many as 78 million working Americans do not have a retirement savings plan at work and less than 10% of workers without workplace retirement plans contribute to an outside savings vehicle. The Obama administration believes, according to the budget, “The Nation needs to do more to help families save and give them better choices to reach a secure retirement.”¹ The budget laid out six key proposals that may affect retirement savings. April 2015