How to plan your 401(k) in 2019?
Investing in a 401(K) plan is quintessential for an average American to enjoy a happy retirement. In fact, managing it
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Category: Retirement
An offer letter is in the mail. Now what?
At this time of the year, with bonuses from last year pocketed, I am sure a few of you are looking for greener pastures! What you’re going to do with your 401k plan balance is definitely not one of the top things on your mind when switching jobs. However, it is an important decision that needs to be made.
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Plugging the holes in your retirement bucket
Per US Department of Labor, a 1 % higher 401k plan fees and expenses could reduce your balance at retirement by 28% over a 35-year career. That’s a big deal! ! As not all employers match employee contribution, people are looking to financial advisors for answers (and ironically paying hefty fees to find ways to reduce fees).
Continue readingJohn Bogle: Father of Index Funds died at 89
Yesterday, January 16, 2019, will go down in history for the passing of John Bogle, fondly known as the father of index funds, who died at the age of 89. He was the first to create a mutual fund tied to an index such as S&P 500 and made index investing a popular phenomenon. He revealed to the world that active fund managers rarely beat the benchmark indexes on a consistent basis and are plagued by exorbitant advisory fees and high operating costs.
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The stock market is in a panic. What to do with your 401k?
The stock market is in a panic! Last quarter of 201 8 has been one of the worst for the
Continue readingWhat to do when your portfolio is all RED?
People fret about rising volatility but are not prepared to handle it. Having a financial plan tailor-made to achieve your goals and objectives will help and also provide an opportunity to earn a better return.
Continue readingThings you don’t know about zero fees funds!
Low or zero fee funds are good investment options provided their returns net of fees is higher than that of their peers.
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Is protectionism the new world order?
The global world is now moving back to those times where the country’s domestic industries were protected from foreign competition by taxing imports. Maybe the globalization era is coming to a halt. “Protectionism is the ‘quick fix’ that is more common among the politicians for its short-term political benefits, while its longer-term costs are significantly high,” Deutsche Bank wrote in March.
Continue readingBonds as a choice of investment for your 401k/403b/457 plan?
Bonds are debt obligations of the issuer to return the principal amount with interest to the investor. Bonds are issued by both domestic and foreign entities such as a government or corporation. So it can be differentiated based on geographies, just like equities. Refer to our previous blog on equity Equity Funds (right to ownership). But the more common differentiator for bonds is time horizon or duration.
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3 Tenets of Equity Funds
A typical retirement plan may have anywhere between 15 to 30 investment options. In certain cases, the list may contain 100+ options. Honestly, the longer the list, the harder it is for employees to make a sensible choice. Keeping a tab and trying to understand so many options is not an easy task and requires a lot of time. And that dilemma sometimes results in inaction and you may end up parking your hard earned money in assets that don’t offer a good return or charge higher fees.
Let’s take an example of a retirement plan that has 15 options. A typical line up consists of 7-8 equity funds,4-5 bonds and 1-2 options focused on specific assets like real estate, oil & gas etc.
Let’s dig deeper into equity options. The first question in your mind may be ‘why 7-8 equity funds?’ The idea is to offer choice and diversification so that you don’t pull all your eggs in one basket.
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