TP-Advisory Services

Taper Talk

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“Tapering…please bring it on. We wanted it yesterday, or last month, or even years ago. We never thought QE helped the economy and certainly don’t think keeping it around is a good idea. It’s created uncertainty at an unprecedented level.

But, we aren’t holding our breath waiting for the Fed to change course. Despite better data on the economy, the Fed will take its sweet time, possibly waiting until March before slowing the pace of “quantitative easing,” the monthly purchase of $85 billion in long-term securities.”  See Taper Talk

How to be a 401k millionaire

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“Fidelity Investments analyzed the savings habits of roughly 1,100 401(k) investors who earned less than $150,000 a year and had accumulated more than $1 million in 401(k) savings to determine how they reached the million-dollar mark.

The retirement plan provider found these savers, who were an average age of 59, had some key behaviors in common: they started young, always took advantage of the company match and saved a large chunk of their pay each year, a median of 14% (not counting the company match).”  See 401k millionaire

November Retirement Report

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Intermediate and long term interest rates are on the rise. On January 1, 2013 a 10-year Treasury bond yielded 1.84%.  As of August 22nd, yields on those same bonds climbed to 2.86%. U.S. stocks also enjoyed strong gains during this time period while their fixed income counterparts have not fared as well.  It is not uncommon for fixed income investments to produce negative performance in a rising interest rate environment, but their recent negative returns beg the question, “Should I be invested in fixed income?”  November 2013

 

Part IV-401k Fees

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How much does it cost to run a 401k plan? What am I receiving as service? Among other duties enumerated by the Department of Labor, 401k plan fiduciaries have a “responsibility to ensure that the services provided to their plan are necessary and that the cost of those services is reasonable.” That’s not exactly a hard metric to measure what your plan should cost. Typically fees can be in the range of 0.5% to as high as 5% of your account balance. New regulations that went into effect in 2012 require 401k plans to provide a more transparent breakdown of their fees to employers and employees. While this may help, confusion is still the norm.  See 401k Plan Fees

Part III-401k Education

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Participant education is one of the most neglected aspects of a 401k plan. The goal for a successful plan should be the same for the sponsors and the participants; to reach retirement with the accumulated assets they need. Studies have shown that nearly one in four eligible employees do not contribute to their company’s 401k plan. Studies also show that even actively participating employees often have contribution rates and investment allocations inconsistent with their long term goals.  See 401k Education Program 

October Retirement Report

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BRI’s annual Retirement Confidence Survey shows need for action now.  This survey highlights that workers‘ confidence regarding their ability to “live a comfortable lifestyle” in retirement has dropped to its lowest point in 23 years, with 28% of respondents identifying themselves as “not at all confident.”  Clearly, low savings levels and high consumer debt are problems for workers, demonstrating an urgent need for action.  October 2013

3rd Quarter Newsletter 9/30/2013

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“We’re from the Government and we’re here to help you.”  Bond investors are beginning to wonder if that is still the case. Quantitative Easing, Open Market bond purchases, extended unemployment benefits and disability payments. Is this economic stimulus or financial repression? The fate of interest rates and bond prices appear to be under the direction of the Federal Reserve. This in turn has kept borrowing costs low. Some aspects of the economy appear to have benefitted. Then they mention the “Taper” word and all of a sudden the “safe haven” of bonds doesn’t seem so much anymore.  Newsletter 9-30-2013

Part II-Service Plan

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“Out of sight out of mind” is not how you treat an important piece of equipment. Regularly scheduled maintenance ensures vital machinery and tools perform at optimal levels. The same principles apply to your 401k. Putting in place a Service Plan that addresses the essential elements of your plan can work the same way.

The Service Plan should focus on the main objectives of addressing the fiduciary needs of the 401k sponsor and by extension address the needs of both the sponsor and the participants. A well run plan serves everyone’s best interests.  401k Service Plan

Are Stock Bulls Banking on a Bubbly Endgame?

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It’s always dangerous to spin stories about exactly why markets are behaving as they are. And a major hazard of the past few years has been the instinct to point out financial bubbles that weren’t there.  But, granting all that, sometimes writing about Wall Street means running toward danger — especially when a provocative narrative is also plausible.  See Stock Bulls