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The Three P’s To Picking A Fund Manager

For those that have sat in a conference room building out a new strategy for your company, you know that often the team leader will discuss the three P’s: Purpose, Process, and Payoff. With well over 10,000 mutual funds in the marketplace and now a slew of actively managed exchange traded funds, picking a mutual fund manager may end up being one of the more challenging tasks for an investor in their 401(k) plan or those with a large portfolio. Is it best to pick a fund manager that is a lone ranger? Is it best to pick a fund manager that selects funds through a team approach? I have often asked investors, which is most important to win the horse race? The horse or the jockey? To be successful as an investor, I would suggest you filter them out by using the purpose, process, and payoff system. Purpose: Do you know exactly what outcome you are looking for with ...

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The Biggest Investment Mistake You Make Every Year

We all know that investments can be for short term, medium term, or long term.   Investments are often thought of in terms of stocks, bonds, mutual funds, real estate, etc.    Some people invest their money in private ventures and some in public companies.   Business owners will almost always tell you the best investment is their business.   In my opinion, the biggest investment mistake each and every person makes on a yearly basis is not setting aside enough of their personal income to invest in themselves.   Investing in yourself can be personally, professionally, and financially rewarding.   Here are my top five ways to invest in YOU! Advance Your Education- There are so many outlets today to gain extra knowledge and education.  It doesn’t have to be done necessarily by going back to school full time.   You could do a three day executive course or just sign up for one night class.  You could take an online course on a site like ...

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Why The 401(k) Needs To Be Replaced

You would think because I’ve been doing financial planning for 21 years that I would be a flat out 100% advocate for 401(k) plans.    With the ability today to put away money on a pre-tax basis in your 401(k) or now the use of a Roth 401(k) there are many different ways to save for your future.    Many employers even offer a ‘match’ of some of the funds that you put away into your plan as an incentive and some companies even give a year end profit sharing contribution if the company has done well.    The 401(k) has now become the Gibraltar Rock for most people in the 30’s and 40’s as the main driving force for their future retirement.    In most 401(k) plans there are even more options including a multitude of mutual funds and in some cases a self directed brokerage account if you are savvy enough to manage the 401(k) on your own.     With all of this ...

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When Your 401(k) Makes A Change On You

In the past year, many of our clients have seen changes made to their 401(k) plan.   These changes may happen from two separate businesses merging, your employer trying to save costs, or simply a change of funds within the existing 401(k).    Usually, you will get either an electronic or written notification of these changes.   The problem is that most 401(k) participants usually don’t take the time to read the changes which can affect the overall performance of your largest retirement asset.   Here are three things to watch out for when a major change gets made to your 401(k) plan. Be aware of the mapping process –  The idea of having a map or a Garmin is to get specific directions on the most efficient way to get from point A to point B.   When your existing 401(k) plan merges into a new 401(k) plan it will go through a process called mapping.  What generally happens is that the new 401(k) ...

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Personal Finance 101 – The Tax Management Triangle

Don’t you wish that you had a crystal ball to know what the tax rates will be 20 years from now?   In 1970, the top tax marginal tax rate was at 70%.   In 1980, the top marginal tax rate was still at 70%.   In 1990, the top marginal tax rate hit a historical low of 28%.   In 2000, that top marginal tax rate had moved back up to 39.6%.   Just one year ago in 2010, the top marginal tax rate settled at 35%. (source: taxfoundation.org)  With all the uncertainty going on with our debt and taxes, how can you best plan your finances for the certainty of uncertainty when it comes to income taxes? Over the years, we’ve adopted a tax triangle methodology around taxes and investing.  This allows an individual investor or business owner to think about where they place their investments and tax strategy upon the accumulation and distribution phase.  Here are the three sides to the triangle. ...

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401(k) Charges Are Coming To A Theater Near You

New rules about 401(k) charges finally surfaced from the Department Of Labor last month.  Since 401(k) plans have become one of the largest assets owned by U.S. households today, the whole idea behind these rules are to help consumers have a good idea about the fees charged in these retirement plans. Beginning January 1st, 2012 your statements will have a whole new look laying out most of the fees and charges in plain language. The new regulations will affect about 483,000 retirement plans and 72 million workers who will be able to gain a better feel about what they are paying for in the plan.  (source: www.miamiherald.com) The details may be able to help investors fill a big void because many people don’t know about the litany of fees that may be charged against their 401(k) account for recordkeeping, investment advisory, brokerage, or other administrative services. Sometimes, as many as 6 to 8 indirect fees and expense can be charges ...

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