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The Biggest Threats To Your Financial Wellness: Fear and Hesitation

You’ve made it to the end of our three-part series about the biggest threats to your financial wellness. (Wanna catch up? Check our Part One and Part Two, then come back.) If you’ve noticed a theme, it’s because the biggest threats to your finances come from within.

In this post we’ll discuss two of the most common failings people experience: fear and hesitation. If you let these internal feelings dictate how you live your life and use your finances, you’ll struggle to achieve your goals.

Financial Fears

Money is a tool. Any good tool is designed to make a person’s work easier. You have to let your money work for you to make your life and future easier and better. But uncertainty in the market and fears powered by “what if?” thinking can threaten the power of your financial strategies. Decision making based on fear is nearly as dangerous as impulsive behaviors. Fear clouds your mind and removes objectivity, turning everything into a dire situation when you need calm and collected observation skills.

Allowing fear to dictate how you utilize your personal finance is a surefire way to reduce its potential. Panicked selling during market downturns, jumping on investment fads, and other fear-motivated behaviors can result in short-term gains but long-term lessons. It’s all about time in the market, not timing the market. Combat your fear by building a strong financial strategy and standing firm in it. Your future will thank you.

Hesitation and Personal Finance

Fear and self-doubt can do more than motivate poor decisions: they can cause paralysis by analysis. If you are facing a large problem and feel overwhelmed, useful data can make it worse. The decision becomes larger than it actually is and you end up missing out on a valuable window for your decision, leading to lost opportunity cost. When it’s time to act, you won’t have time to hesitate. Do your research, consult with a trusted advisor, and act decisively. Commit to a plan and then measure the result. Even if it doesn’t go as well as you hoped, you gain useful insight for future initiatives. It can also teach you a lot about yourself, which is always valuable for your future.

Overcoming Yourself

Unfortunately, fear and doubt will always be present in your financial life in some way. You have to accept them as part of yourself and learn to use that energy when making decisions. Any time a decision has risks associated, you will have some sense of fear or doubt. If you allow your feelings to dictate your financial life you will be stuck for a longer time than you need to be. You are master of your own destiny. If that’s not empowering, we don’t know what is.

Want to figure out a bold financial strategy that works for you? Need to determine your risk tolerance? Complete this questionnaire to determine how we can help you guide your financial future.

The Biggest Threats To Your Financial Wellness: Ignorance and Impulse

As we continue our series exploring threats to your financial wellness, we need to discuss two of the biggest issues for American personal finance: Ignorance and Impulse.

Much of the American public is uneducated about personal finance and how best to navigate the space. There’s too little training in how to teach yourself and train against your base impulses to succeed, especially as young people go through high school courses focused on STEAM skills. We’re preparing our youth to be successful professionals but we are failing to groom them for financial wellness. This can be a painful topic, as our lack of teaching the next generation can often reflect our own blind spots.

Financial Ignorance

If you’re like most Americans, your financial education primarily consisted of two lessons: how to balance a checkbook and supply/demand economics. But checkbooks are outmoded and don’t fit today’s digital landscape and supply and demand can’t be the sole guiding principles for your financial life. This unawareness is taken advantage of by predatory institutions who use confusing language to obscure the uneven nature of their business relationships. From payday loans to confusing jargon surrounding different account types, most financial vehicles work in favor of the institution rather than the individual.

So how can a person improve themselves to push back against these practices? Through education. Whether through community college courses, Udemy.com courses, retaining a personal advisor, or spending some time reading on Investopedia.com, a wealth of resources are available online.

When determining what content deserves your attention and, potentially, money, ask yourself “who benefits?” Many thought leaders in the industry can push out books, workshops, and other media as a means to augment their sales funnel. Avoid paying for these sorts of things when possible – your local public library likely has a wide selection of useful texts. If not, you can always request they purchase what you want to read.

Impulsive Behaviors

How many Amazon purchases did you make in 2008? Compare that number to last year, and we’ll bet it increased by a factor of ten. Impulse buying fueled by credit cards, saved billing data, and intricate marketing mechanisms targeting your impulses make this sort of purchasing a pervasive and sneaky way for companies to increase their revenue while decreasing your net worth.

Credit cards.  Lunches out.

Small behaviors can become big, problematic habits. If the average lunch out costs $10, and you’re going out for lunch 5 days a week, that can add up to $2,500 annually! (Compiling your small purchases and habits into large chunks can be an eye-opening experience – do you really want to pay $4,800 over 10 years for a gym membership you never use?)

If your spending is out of hand the best thing you can do is track everything. Keep a spending journal or spreadsheet. Use an online service to track where your money is going. Whatever you have to do, identify the problematic habits that are costing future you thousands of dollars. Once you’ve found them, you can change the problematic behaviors.

Master Your Future

You are the master of your financial future. Market upswings and downswings are going to occur and you have to be ready. Before making a big decision or impulse purchase, pause for a moment and explain why you are doing what you are doing – if saying it out loud doesn’t make sense, reassess your choice. However, you are only human – you will fail to control your impulses and you will make poor judgement calls. The trick is in recognizing when you slip and correcting for it ahead of time.

Build some discretionary spending into your budget. Give yourself an allowance. Make yourself save for big purchases the way you had to as a child. It’s not enough to just arm yourself with good behaviors, though. They have to be backed up by a sound financial logic and strategy that will carry you through the good times as well as the bad. Whether this means online courses, extensive reading, or engaging with a financial advisor, you have to figure out what works best for you and then stick to it.Ready to master your financial future? Learn more about our private client services and how we can help you build your wealth.

The Biggest Threats To Your Financial Wellness: Debt and Undisciplined Behavior

If you’ve overcome the challenges to building wealth and have put a plan in place to systematize your finances, you’re off to a great start. In addition to continuing these behaviors over time, you must guard your burgeoning wealth against threats from within and without. Undisciplined behavior can keep your financial wellness plan from taking hold while accruing too many debts of the wrong sort can slow down your momentum for years to come.

High-Interest Debts

Credit card balances.

Cash advance.

High-interest debts are the sort you want to avoid. They can act like an anchor, weighing down your financial game plan and holding back your life from improving and advancing. Some ways to avoid building up these problematic balances are:

  • Don’t spend what you don’t have. Sticking to your existing budget can be difficult, but it’s better than crushing debts.
  • Pay off credit card balances at the end of every month. If you have to use a credit card, you should pay off the balance in full every month.
  • Start an emergency fund at a separate institution from your regular accounts. This will let you build your fund and keep it separate from your regular pool of finances.
  • Set up automatic savings deposits. Take advantage of the systematized processes available to build your finances without having to think about it.  
  • Run your home’s finances on the cash envelope system. This process involves planning and setting your budget based on cash banked in envelopes. Once the envelope is emptied, your budget is depleted for the month and you have to wait to re-up your cash.

In addition to these avoidance behaviors, you should never utilize payday loans. These predatory lending vehicles are structured in a way to accelerate your debt load and keep you paying forever. They contribute to a vicious cycle of poverty in the US that affects far too many people. Negotiate with your bills due, explore a refinancing loan, or take on a second job to handle difficult financial issues rather than this high-risk move that does nothing to benefit you.

Healthy Debts

Not all debts are created equal. While high-interest debts are a threat to your well-being, some debts present opportunities to improve your life down the line. Examples of good debts are:

  • A mortgage – the opportunity to build equity and potentially create a second income stream by renting your property is a huge investment in your future.
  • Credit consolidation loan – using this option to eliminate your high-interest debts can keep some people out of bankruptcy. They do come with restrictions that should be considered very carefully, but consolidation loans can represent a step towards greater financial awareness and freedom.
  • Personal business loan – taking a smart loan to help finance a personal business venture can lead to greater financial prosperity. We suggest you begin personal business ventures as an alternative venture to establish your business before exploring financing.

As opposed to unhealthy debt, good debt offers a benefit to you that is equal to the financial risk involved. These debt options have more stable loan rates and are less exploitative, serving as a launching pad for you to invest in your future. Unhealthy debt only solves a temporary problem which stems from poor financial discipline.  

Lack of Financial Discipline

Much misery can be tracked to undisciplined financial behaviors. Unhealthy debts arise when people act out of desperation or on impulse. Anyone can come up with a financial game plan to improve their life, but it takes real guts and determination to stick to it.

That sort of hard work pays off in the end, but it requires a dedicated patience that has fallen out of style in a society that puts a premium on instant gratification. The trick is to build a healthy financial mindset and cultivate a relationship with your finances in which you realize that your money is a tool for wellness, not a delivery system for your happiness.

Building Your Financial Game Plan

If you’ve successfully avoided those problematic debts, pat yourself on the back. If debt is an issue for you, you deserve recognition too – learning more about personal finance is the first step in finding your way out. Exploring what solution works best for your case, or whether to employ the debt snowball or debt avalanche method can be eye-opening.

Set and track a budget and stick to it, and you will see those problems begin to melt away. The trick to sticking to your new, financially healthy lifestyle? A mindset of abundance and gratitude. Know that the future holds promises of opportunity to make your life better, and keep rising up to be financially ready to take advantage of those opportunities.

Want to learn more about building wealth and staying out of problematic debts? Change your world by joining us at JBWealthfit and start working on the future you want to live.

The Four Challenges to Building Wealth: Financial Organization and Coordination

You’ve made it to our final segment of our series concerning the four challenges to building wealth. We’ve explored hurdles like financial institutions and ways to adopt their strategies, lost opportunity cost, and the velocity of money. Your biggest challenge to building wealth though?

It’s you.

No matter how savvy and dedicated you may be to growing your wealth, it won’t work if you are not approaching it in an organized and coordinated way.

You Can’t Grow What You Don’t Know

The biggest reason financial organization and coordination matters is because if you can’t track your financial life you can’t determine its performance. So many people let their accounts, bills, mortgage, and more stay separate and unassociated in their minds that it’s a miracle they can pay their taxes every year, let alone handle their bills every month. Without a centralized hub for your finances that makes it simple to check your financial health, it can be almost impossible to grow your wealth effectively.

Determine What Works for You

There are plenty of ways to build that hub. Some people opt for spreadsheets that track net worth and monthly bills. These can be powerful, since they’re self-driven and require you to interact with your money in an active manner. Other people opt for web-based applications that aggregate your financial data in one place. Some utilize desktop-based software to great effect. The secret is in determining what system best meets your needs and helps you along your path to financial wellness.

Consistency is Key

Once you’ve figured out your system of financial tracking, you have to build that into your life. Set calendar reminders. Create appointments with yourself. If your tracking and managing does not remain consistent, your progress will suffer for it. Being able to observe trends such as ballooning restaurant spending or growing interest on credit card debts can help alert you to issues before they get out of hand. You should do whatever it takes to make your financial health check part of your regular routine.

Coordinate Your Financial Goals and Strategies

Once you’ve found a method that works for you and made it part of your routine, you need to use it to track your net worth as well as your additional financial goals. By tracking goals such as paying off student loans, building home equity, or eliminating high interest debts, you can begin to coordinate your finances to support those goals.

If your equity growth isn’t outpacing growing interest, you should shift your focus and capital to eliminate those debts. Need to grow an emergency fund more quickly? Consider shifting funds away from your investment accounts and toward liquid savings funds.

By putting your financial health in one accessible, trackable space and tying overall performance to your goal progress, you put yourself firmly in the driver’s seat. It can be eye-opening, intimidating, and uncomfortable, but growth comes from discomfort. The difficulties you experience now can either teach you important lessons for your future well-being or you can ignore them, as so many people choose to.

Ready to tackle those financial goals and build a future to be excited about? Contact us to get started.

The Four Challenges to Building Wealth: Lost Opportunity Cost

As we kick off our series exploring the four challenges to building wealth, we’re taking a deep dive into lost opportunity cost. The choices we make every day affect our lives in far-reaching ways, from our diet and fitness routine to financial discipline. When you decide to do something you aren’t just choosing that option over others – you’re choosing its future over the others. How are your choices affecting your life and your future?

The Future Impact of a Dollar

When you decide to spend your hard-won money on something, you don’t just lose that dollar. You are effectively giving up any future potential that dollar had to gain interest or grow in value through saving and investing. It’s not the total balance that you’ve passed on though. An impulsive lunch out today could mean you don’t have the funds you need for a medical bill or car repair later.

It seems extreme, but many small choices add up to either financial freedom or a paycheck to paycheck lifestyle. Evaluate every dollar spent carefully; is the outcome of its use at this moment worth sacrificing its future?

Measuring Lost Opportunities

To help guide your financial decision-making, you can calculate the value of lost opportunity cost to help weigh your options. While pro/con lists are great tools for evaluation, the hard numbers and figures of opportunity cost help provide firmer metrics, something essential for financial decision-making.

To determine the cost of your lost opportunity: subtract the value of the choice you made from the most valuable choice. The remaining value is the lost opportunity cost. This assessment can be applied to choices throughout your life, especially those linked to personal finance.

Volatility in Investments

When evaluating investments, it is important that you account for volatility. As we’ve written extensively – market volatility can be disastrous for your returns. Two investments which have the same expected return are not equal – the least volatile one has less risk and, therefore, a lower opportunity cost. Assessing the risk of an investment is key to continued successes, especially when expected returns are similar.

Using Lost Opportunity Cost to Fix Personal Finance

An awareness and use of this economic principle can help you to solve some of your problematic behaviors holding back your financial health. Assessing the true, long-term costs of frivolous spending, high-interest credit card debt, and lackluster savings plans can be eye opening. Take the time to fully examine your financial life to determine whether you are willing to pay to cost of your lost opportunities. The clarity this will bring can improve your financial life and transform your world.

Wrap Up

Nothing costs as much as a lost opportunity. It’s a heavy concept to grapple with, but taking extra time to be more thoughtful and direct in your financial decisions will truly change your life. This is also a skill that you can apply to all areas of your life, not just your financial accounts.

Ready to arm yourself with the knowledge needed to grow your wealth in an uncertain world? Join us at JB WealthFIT to learn the difference between thriving and surviving.

Market Update: Avoid the Noise and “Tilt”

I’m sure you saw all the headlines yesterday about the market.

DOW downfall iphone CNBC Markets in Turmoil

The media is obsessed with hysteria and trying to get viewers, readers, and followers. The question you need to constantly ask yourself is:

“Is this noise or is this evidence?”

In the last 2 days the SP500 has dropped -2.1% followed by a -4.1% drop yesterday. Two back to back days like this is pretty rare. Since the 1960’s, double dipping has happened less than 1% of the market’s total lifetime. The last 2 twice-occurring drops were August 2015 and in November 2011. These were rare, but still memorable.

To put this into perspective, the SP500 is now at prices we last saw in mid-December 2017- all of 8 weeks ago. The SP500 is still up 17% over the past year. The market is now -6.2% below its close on Jan 31, 2018. This recent drop is not a big drop in magnitude, it just happened fast enough to make an emotional impact.

After a year of unprecedented market growth (12 straight months of market gains) with the DOW never before reaching 25,000 and the S&P 500 reaching over 2,700, we are now seeing volatility creep back into the system. Yes, the DOW did have its largest one-day point drop in history. However, it was only a 4.26% drop in one day – not the biggest percentage drop in history.

Evidence, Noise, and Tilt

This is the EVIDENCE.

Pay no attention to the NOISE generated by the media and pundits whose jobs are to get more viewers, reactions, “likes,” and “followers.” You know better, pay attention to the evidence and the confidence of how you are invested using diversification and trend following strategies.

Poker uses the term “TILT” when your position at the table is either down a majority of chips or you’re stacked. Tilt breeds emotion and good decisions are rarely made using emotion instead of evidence. Investing is much the same way. When the market starts to tilt one way or the other we get emotional about our money.

Negative tilt, even a little bit like we’ve seen the past couple days, can cause panic and irrational thinking. Positive tilt, like we’ve seen over the past year can create overconfidence (see bitcoin) and cause more risky decisions.

At Jarred Bunch, we’ve always used evidence and rules-based strategies that avoid “tilt.” Our educational philosophy has always been to seek the evidence and avoid media-fueled noise.

Want more evidence?

The reality is that the market is in a drawdown more than not, in fact 70% of the time (historically) is spent in a drawdown. Ben Carlson recently wrote about Robert Frey’s video “180 Years of Market Drawdowns” and showed some context to this with the following chart:

historical market drawdowns

Carlson further went on to analyze monthly drawdowns to see the size of the loss:

tabulated market drawdowns 1927-2016

He states, “Over the last 90 years or so the market has been in a bear market almost one-quarter of the time. Half the time you’re down 5% or worse. It’s difficult to appreciate this fact when looking at a long-term log scale stock chart that seems to only go up and to the right. This is why stocks are constantly playing mind games with us. They generally go up but not every day, week, month or year.”

What’s the Payoff?

The payoff by sticking with your investment plan is that, over time, the market trends upward. The 10-year S&P 500 is up 142%, for an annualized return of 9.26%. It’s the gyrations in-between that become noise and detract us from our goals.

Looking at rolling returns we get a great picture of how the stock market performs over good and bad times. Over short periods the market can deliver exceptionally high or exceptionally low returns. Over time this fluctuation smooths out with a worst 20-year period delivering a return of 6.4% per year and the best returned 18% per year. See the chart below provided by Dana Anspach’s research.

SP 500 Index Rolling Returns chart

What we do know about the market is it will continue to fluctuate and experience losses on a regular basis. How we as investors use this evidence to stick with our investment strategies is the key decider to our long-term success.

Top 10 Things Learned at the EBI Conference

We get invited to a plethora of investment conferences and are always reluctant to attend. Getting “sold to” and/or hearing biased investment information is a big turn-off for us. We aren’t product pushers and feel that real evidence is the only way to make the best decisions for our clients. This conference discusses “evidence” from a wide array of experts and allows us to decide how to use the information.

The line-up of speakers included AQR’s Cliff Asness, Vanguard’s incoming CEO Tim Buckley, Jason Zweig from the WSJ, Wes Grey from Alpha Architect, and many more. In addition to gaining insight from these learned people, we get to network and discuss our ideas with them as well. This is invaluable and helps us as we constantly monitor how we invest for our clients.

Here are the top 10 things we learned at EBI:

1. Josh Brown and the Ritholtz Wealth Management team are great hosts and Josh is pretty darn funny. His exit strategy for Bitcoin is to have his stolen from him.

2. Scott Galloway, NYU professor and author of The Four, New York Times bestseller book, showed how each of the big four (Facebook, Apple, Google, Amazon) each appeal to a separate and specific instinct, or unique “organ.” I highly recommend this book.

3. 58% of the population has Amazon Prime, yet only 55% of the population voted in the 2016 election.

4. Three keys to living to 100: #3 is genetics, #2 is healthy lifestyle, #1 is how many people you love and care for.

5. Eddy Elfenbein, Portfolio Manager and Crossing Wall Street blogger, said that “being an investor means being at war with your own instincts.” People hate facts, so to be a successful investor you must fight your own instincts and emotions.

6. American billionaire hedge fund manager and co-founder of AQR Capital Management, Cliff Asness was asked what factor in the Fama-French 5-Factor model he most believed in. His response was, “Gotta love the market factor, but nobody is interested in talking about that.” (Most of a portfolio’s risk and return are driven by this factor). He also likes the value factor, it has the best story. He least likes the small cap factor saying the data says it’s not good and the story is not good. Of course, momentum is one of his favorites not included in the 5-factor model. (We call it the 6th factor.)

7. Vanguard’s Tim Buckley was asked “What’s your favorite stock?” He quickly retorted, “All of them.” Indexing is a big focus for Vanguard as is lowering fees. However, still over $1 trillion is invested in their actively managed funds. He says with all the brilliance in the finance industry, it’s tough to outperform.

8. Jason Zweig, WSJ columnist and author, shared a wealth of wisdom with us. Most notable was “the most dangerous bias is the bias we don’t know we have.” People are quick to point out the biases of others when they should be looking in the mirror to see their own flaws. Jason learned to question everything from Daniel Khaneman (who I believe should be required reading for everyone). At one point in his life he didn’t know why he did anything. Jason’s book Your Money and Your Brain is excellent. You should pick it up.

9. Best meme was of Jeff Bezos, founder and CEO of Amazon.com, from Galloway’s presentation.

10. Josh Brown opened with a remark about the importance of evidence based investing. With Millennials, he said, they don’t care about legacy brands. When you tell them stuff about investing they look it up, right then, on their phones. They want to see if what we’re doing and recommending is working. I think it’s that way with most investors now.

That’s why we work so hard to be transparent, use real strategies that work, keep it simple, and act in the best interests of our clients. That’s what evidence based investing is for us.

Ritholtz and Co., thanks again for another great conference. We’re looking forward to next year!

Cybersecurity Tips from the IRS

The holidays are also the prime season for criminals shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data. Cybercriminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or using stolen identities to file a fraudulent tax return for a refund.

In addition to its specific recommendations for online security, the IRS says people can take a couple of additional steps several times a year to make sure they have not become an identity theft victim.

One is to receive a yearly free credit report from each of the three major credit bureaus, and check it for any unfamiliar credit changes.

Another is to create a “My Social Security” account online with the Social Security Administration on which users can see how much income is attributed to their SSN. This can help determine whether someone else is using the SSN for employment purposes.

Following are the IRS’s seven steps to help with online safety and protect tax returns and refunds in 2018.

  1. Shop at Familiar Online Retailers

The IRS notes that sites using the “s” designation in “https” at the start of the URL are generally secure. Users should look for the “lock” icon in the browser’s URL bar. This is not 100% accurate as some criminals can obtain a security certificate, so the “s” may not always vouch for the site’s legitimacy.

  1. Avoid Unprotected Wi-Fi

Unprotected public Wi-Fi hotspots may allow thieves to view transactions. Do not to engage in online financial transactions if you are using unprotected public Wi-Fi. Also be aware of purchases at unfamiliar sites or clicking on links from pop-up ads.

  1. Learn to Recognize and Avoid Phishing Emails

These emails pose as a trusted source, such as financial institutions or the IRS, and may suggest that a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. If you aren’t expecting an email from a specific company, then it probably is not real. You can always call the company in question to verify.

  • The link may take users to a fake website that will steal usernames and passwords
  • An attachment may download malware that tracks keystrokes
  1. Keep Computers, Phones and Tablets Clean

Using security software to protect against malware that may steal data and viruses that could damage files is a must. The software should be set to update automatically so that it always has the latest security defenses. As well, firewalls and browser defenses should always be active. “Free” security scans or pop-up advertisements for security software are to be avoided.

  1. Use Strong, Long and Unique Passwords

According to the IRS, experts suggest a minimum of 12-character passwords, but says “longer is better.” It says longer phrases are better than a specific word, and recommends the use of a combination of letters, numbers and special characters. Each account should have its own password. A password manager can help keep track of multiples ones.

The National Institute of Standards and Technology recommends that users create simple — but still long — passwords that are easy to remember.

  1. Use Multi-Factor Authentication

Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication. This means users may need a security code, which is usually sent as a text to a mobile phone, in addition to usernames and passwords. Some financial institutions will also bolster protection by sending email or text alerts when a withdrawal or change to the account takes place.

  1. Encrypt and Password-Protect Sensitive Data

Anyone keeping financial records, tax returns or any personally identifiable information on a computer should encrypt and protect these data with a strong password, see above. You should also back up important data to an external source, such as an external hard drive. When it is time to dispose of a computer, a mobile phone or a tablet, it’s important to wipe the hard drive of all information before trashing.

Its very important to protect yourself, especially this time of year. Doing so will make sure your holiday season is more enjoyable.

 

401(k) Lawsuits Becoming More Prevalent

Nordstrom has been accused of allegedly selecting and retaining high-cost investment options in its $2.8 billion 401(k) plan when lower cost options were available. The suit states that Nordstrom allowed unreasonable, excessive fees to be charged to its plan participants, failed to use lower cost alternatives, and made inadequate disclosures regarding the specific dollar amount it charged them for administrative expenses.

The lawsuit against Novitex alleges the plan allowed unreasonable high fees to be charged for plan services, including advisory services. The lawsuit states that UBS, who is providing the advisory services, is “excessively compensated.” In addition, Novitex permitted unreasonable fees to be charged for record keeping and investment management.

Investment News reports that litigation targeting excessive retirement plan fees has grown over the past few years. Most often targeted are fees paid to service providers (such as TPA’s for record keeping and mutual fund companies).

“It is rare, for now, but something I think you will see with increased frequency,” Marcia Wagner, principal at The Wagner Law Group, said.

The Novitex lawsuit also furthers a developing trend of excessive-fee lawsuits targeting smaller retirement plans rather than just the multibillion-dollar ones.

“Smaller plan fiduciaries increasingly are in the crosshairs of ERISA class actions, as illustrated most recently by Novitex,” said Duane Thompson, senior policy analyst at Fi360.

If you are a sponsor of a 401(k), then you need to be up to date on how your plan stacks up due to the new Department of Labor rules and increased scrutiny of these plans.

At Jarred Bunch, we review a lot of small to mid sized company 401(k) plans. It is not unusual to see high fees and limited/outdated investment choices. In addition, there is rarely an education program available to employees, and, in many cases, the company (sponsor) is the investment fiduciary.

Our goal is to help relieve this burden for our clients by offering the following:

  1. We serve as the investment fiduciary on the plans we implement.
  2. We offer financial education for companies and their employees.
  3. We benchmark your plan, investment options, and costs to make sure your plan is where it should be.

If you haven’t looked at your 401(k) plan in the past couple years, then you need to contact us right away. We offer a free analysis so you can see exactly where you plan stands.

Let us address these issues with our Future 401k Plan, visit www.401khack.org to learn more or sign up. You can also call or email one of our 401(k) experts today. An analysis takes very little time and could save you a lot of money and headache.

Nobel-Prize Winning Formula: 4 Ways To Boost Savings

I love it when a Nobel Prize winner gives humanity a gift everyone can use and enjoy. That was the case when Prof. Richard Thaler won the Nobel Prize in Economics on Monday (October 9, 2017).

Prof. Thaler’s work over the past 30 years has changed the way we view financial decisions. As a behavioral economist, he’s studied the way we actually think and act instead of hewing to some wrong-headed theories.

According to Thaler’s view, we’re consistently misled by embedded mental biases. We’re hardwired to be overconfident, act on emotion and conflate recent events with the big picture.

Fortunately, thanks to the research of Thaler and other behavioral economists, we can make much better financial decisions. Here are four suggestions:

— Put Your Savings on Auto-Pilot. 

By defaulting employees into a 401(k) with regular, automatic contributions, Thaler’s “Save More Tomorrow” program dramatically increased retirement savings.

It turns out when you don’t have to make a decision — or have to say no to something — people will take the easiest route to set money aside.

Yet you can put any form of savings on auto-pilot. Simply set up automatic withdrawals from payroll or checking accounts into savings or retirement accounts.

— Blast Past Your Biases. 

Behavioral economists have repeatedly shown that we’re naturally biased to think we know more than anyone else, are needlessly confident, can look back in time and claim we can predict the future.

All of these biases cause us to consistently lose money.

If you need to invest in the stock market — all of us need to in order to beat inflation — regularly invest monthly amounts in global stock index funds. You can do this through any mutual fund, IRA or retirement plan.

— Forget the Headlines.

We all get spooked by daily market downturns and bad news. It scares us, so we think we have to do something immediately. We don’t. Never act on fear when it comes to financial decisions.

If you need to invest — who doesn’t? — focus on how much you need to save. Don’t look at returns or stock averages from day to day. It’s just noise. Buy all the time and hold.

— Don’t Get Cocky.

So you picked a stock or mutual fund that made money. Do you think you have more skill, insight and trading ability than the best money managers— and their lightning-fast computer programs? You don’t. It was the roll of the dice.

Diversify your portfolio by investing in large, medium and small-company stocks from around the world.

That’s always been the smartest thing to do. And you don’t need a Nobel Prize to profit from that knowledge.