Sorry Mutual Fund: You’re Fired!

always done it that wayDear Mr. Market:

It has been said that eight of the most expensive words in the business world are: “Because we have always done it that way!”  How often have we heard these words in our personal or professional life?  Where would we be as a country if we embraced this phrase?  Isn’t it safe to say life as we know it would not be the same if generations before us didn’t challenge the norm and truly “think outside the box”?

For decades Wall Street has fought change and attempted to maintain a shroud of secrecy with investors.  Mr. Market has become very skilled at pushing aside information and research that questions the norm and in many cases proves him completely wrong.  In this article we will look at some facts and figures that simply can’t be argued with or twisted into something that they are not.  If you are an investor who owns any mutual funds you need to read this! Continue reading

Looking Under the Hood of your Company Retirement Plan

Dear Mr. Market:

401k under the hoodIf you ask any hard working American what their goal is the answer will usually have some something to do with retirement.  While this common goal should be attainable through focus and discipline the market has certainly thrown its fair share of setbacks at investors.  For most Americans their home is their largest asset and second is their retirement plan (401(k), 403(b), Simple IRA, SEP IRA, etc).  You have a limited amount of control on the value of your home but how can you manage and monitor your retirement plan to help make your retirement goals a reality?  In this article we will take a step back to the basics and look at factors that will have a profound impact on the performance of your retirement accounts and what you can do to control them.

Last fall legislation was passed requiring 401(k) providers to completely disclose their entire fee structure to participants. Investors will now be able to see what fees are associated with the various funds in the plan and what they are paying to participate in their employers retirement plan. According to CNN Money, a working couple will see nearly a third of their investment reduced by these fees over their careers– that amounts to nearly $155,000!! Schwab reported that nearly 30% of investors had absolutely no idea that they paid any fees for their retirement plan. Continue reading

Should Bonds still be part of your Portfolio?

Dear Mr. Market –

BondsWe are only a little over half way through this year yet you have already taken investors on a very interesting ride.  From posting impressive results through the first half of the year and then allowing volatility to enter the market through various headlines and worldwide economic news you’ve certainly kept us all on our toes.

As investors look at their portfolios and their performance results we have seen one alarming statistic over the last month and half.  In June alone individual investors took over $80 billion dollars out of their bond positions!  Investors moved out of their fixed income positions quickly due to rising interest rates and to chase the impressive returns that the equity markets have been posting.  Bonds are often treated as the ugly stepchild of investing but we find that they are typically not truly understood by the majority of investors.  Lets take a moment to get a better understanding on the basics of fixed income investing and more importantly how and why they have a place in your portfolio.

 Bonds/Fixed Income 101:

In their most basic form bonds are essentially a promise to repay money, with interest, on a certain date in the future.  Think of them as an IOU where the borrower is obligated to pay the lender (the investor) a specified amount of money at regular intervals and then to repay the principal amount at the bonds maturity date.  There are several different types of bonds available in today’s market, the following bullet points will focus on the most common ones: Continue reading

10 Ways to Save Money

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(1) Write it down! – You’ve probably heard this before but the act of simply writing down a goal considerably increases the chances of you actually accomplishing it. One of our favorite quotes is: “A goal without a plan is just a wish” – Antoine de-Saint Exupery

One major thing to remember when writing down goals is to make them concrete and specific. “Saving money” is not good enough. “Saving $10,000 for an exotic family vacation” is better…

(2) Set up your “buckets”– Regardless of the stage of life you are in it’s smart to have different accounts (or buckets as we call them) assigned for specific goals and needs. Initially everyone needs to at least start with their “emergency bucket” where at least three months living expenses is tucked away. Get a few other goal buckets lined up as well. If you’re working you’re likely to have a retirement bucket (401k, 403b etc). If you’re self-employed or own a business set up a SEP IRA or a Simple IRA. (there are plenty of choices here but you get the idea) Do you have a “vacation bucket” or an “automobile bucket” ? Get them established and then start filling them up!

(3) Tackle dumb debt Credit cards are NOT dumb or evil; not paying them off in full each and every month is.  We won’t get preachy here and to state the obvious the past few years have truly tested many Americans who had to do their best to make ends meet. What we’re pointing out here is that it makes absolutely no sense to hold a balance on a card when you have cash or other “non-performing” assets elsewhere. For example: If you have $5,000 on a card that charges you anywhere from 13% to 22% and your friendly neighborhood bank is ‘generously’ giving you 0.01% to hold your money….there is a serious disconnect. Continue reading