Author Archives: Andrew Thomas

Fitness & Finances: When Help Helps the Most

Now that we’re a month into 2017, how’s that New Year’s Resolution going for you? If you’re like 80% of the population, my guess is you’ve already called it quits or will by Valentine’s Day. Let’s face it, life gets in the way. It’s not easy.

By far the most common resolutions we all hear about or set for ourselves will involve getting in shape, eating better or losing weight. All those things sound great, but take a lot of time, energy, and dedication to accomplish. And this is especially true if you’re planning to go it alone.

As someone who’s had some success prioritizing my own health and fitness into a daily routine, I see it all-too-often at my gym, especially early in the year. There’s generally two kinds of what I call the “New Year Newbies”, the tortoise or the hare. The hares start out of the gate pushing themselves way too hard. They generally end up hurting themselves or making themselves feel like such a pile of you-know-what afterward that they never want to come back. And then there are the tortoises. They got themselves to the gym but they think that’s all it takes.  Tortoises typically spend their time reading through three gossip magazines while throwing their legs in slow circles on a bike for an hour (without ever breaking a sweat). But hey, can you believe Tarek & Christina (HGTV) are getting a divorce?!…

In this story of the tortoise and the hare, neither win. Because while those people may have taken the right first step by getting themselves to the gym, they probably aren’t going to make much progress. They’ll end up like nearly everyone else when it comes to their resolutions – just another statistic. Let’s face it, this stuff takes time, patience, and a ton of mental strength. And it’s often a process that can feel like lots of small baby steps forward, followed by falling flat on your face repeatedly.

Having someone by your side (that knows what they’re doing) is the key to training.  Specifically, those that seek help from a trusted source, like a personal trainer, tend to achieve far better results than those going it alone. There are several reasons to hire a personal trainer, and it’s not just the motivation that they will charge you if you don’t show up to your work out.  Personal trainers give you individualized workouts that are more likely to provide tangible results. Personal trainers are there to supervise you, tell you when you are using the correct form so you don’t injure yourself. They also provide consistency and a sounding board when you’re not sure your training is going in the right direction (or even progressing like you want).  Trainers are trusted partners who want to see you reach your long-term physical goals.

Now, as you’d expect, herein lies our investing analogy…

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2016 End of Year Review

A lot can happen in one year…

2016 was no exception. It may have felt like it had more downs than ups, but hey, you made it through. And if you can make it through 2016 then you can make it through any year.

This year was packed with election prognosticating, Britain Brexiting Europe, and doomsday predictions in China. It also had the potential to be a HORRIBLE year for the markets. Turns out it wasn’t. Nonetheless, it would’ve been exhausting had you actually paid attention to the markets day by day.

Still, we thought it’d be fun to a quick once-over of last year’s stressors… these are events that threw the average investor for a loop. Luckily, you’re not an average investor. We can tell because you’re actually reading this!

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The Dollar-A-Day Challenge

“That Einstein fella was a real idiot.”
-No one. Ever.

What’s the first thing that comes to mind when you think of Albert Einstein? The Theory of Relativity? Nuclear energy? Bad hair day?…All jokes aside, the guy was an absolute genius that provided some of the greatest intellectual contributions to humanity that we’ve ever seen. Yet with every invention or theory he and all the brilliant minds before him came up with, what has he famously named as mankind’s greatest invention of all time?

Answer: Compound Interest

If one of the smartest dudes to ever walk the face of the Earth said it, we here at blooom figure it’s worth a short blog post. Compounding in investing sounds boring, but trust me, it’s a magical thing for retirement planning.

If you aren’t familiar with the term, you can think of compounding as the way your money can be used to make more money, or the ability for your money to grow exponentially over time. Take just a single dollar, for example. If you invest a single dollar in the stock market and just let it sit untouched for 40 years, it could be worth around $31 by then. That’s a 3,000% (yes, three thousand) return on your investment for simply investing $1! And if you really want your mind blown, consider this – if you’re a newborn baby reading this, by the time YOU retire, that same single dollar invested could be worth $789! In other words, 788,000% growth. Not too shabby.

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John Oliver Hammers the 401(k) Industry - Why blooom Loves it

John Oliver Hammers the 401(k) Industry, and Here’s Why We Love It

By now you may have heard about or seen a Facebook or Twitter share of the recent segment on John Oliver’s “Last Week Tonight” show, which discussed our screwed up 401(k) industry. Not exactly something you’d expect to get a good laugh out of, but in typical fashion, Oliver was able to make a not-so-entertaining subject extremely entertaining with a heavy dose of sarcasm and dry humor. Our take? He nailed it.

At blooom, we’re what’s known as a fiduciary (more on this in a second), which Oliver points out is an important thing to look for when it comes to truly non-conflicted investment advice. We represent what we hope will become the new normal in the industry at some point, although we understand that a change of this magnitude will take time. But until then, there are certainly things you can do to help yourself, which Oliver did a great job highlighting. Here are our thoughts on the main takeaways and a few things we’d like to add.

1) The best time to start is now…or maybe yesterday.
This really just comes down to math, but the power of compounding really is pretty incredible. If you start early, you’ll need to invest far less to end up with far more in retirement. But as Oliver mentioned, not everyone is in the position to save for their retirement. So how do you know if you are?

First and foremost, if you have a 401(k) at work, do whatever you can to contribute up to the full amount your employer will match. From there, here are your priorities from our point of view:

• If you have credit card debt or student loans, don’t contribute a dime more than the full match amount until that is paid down.
• If you have no debt and have enough in an easily accessible savings account to cover at least three months of your living expenses, contribute as much as you can above your employer’s match and get in the habit of increasing contributions by 1% each year until you’ve reached the maximum the IRS allows ($18k if you’re under 50, $24k if you’re over 50).
• If you don’t have a 401(k) at work but have no debt (other than mortgage) and an emergency fund that can cover three months of expenses, look into an IRA and reach out to one of our advisors for some direction on how to open one if you need it.

2) Use low-cost index funds and don’t pay attention to the markets
Not surprisingly, the vast majority of financial institutions continue to market high cost, actively managed products like they somehow perform better and are therefore better investments for their clients. Yet all the evidence seems to prove otherwise. And the case for low-cost passively managed index funds only gets stronger every year.

Instead of trying to beat the market or paying a fund manager a hefty and largely hidden fee to try really really hard to beat the market for you, just ignore the stock market and use an index fund, when possible. Investing for retirement is about retirement, not what the market does in the next week, month, or year. Stick to a long-term disciplined approach, or as Oliver says, “If you stick around doing nothing, while everyone around you f*&%s up, you’re going to win big”. And we don’t have to just take his word for it. John Bogle, founder of Vanguard, along with dozens of other investing icons, famously makes the exact same argument, albeit usually without an f-bomb.

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The Fiduciary Rule and Financial Technology

It didn’t take the DOL ruling (“Final Rule”) or a report by Cerulli Associates for blooom co-founders, Chris Costello and Kevin Conard, to understand that more than 70% of investors are missing out on access to much needed investment advice. According to reporting in WealthManagement.com the new Cerulli Associates report indicates that approximately 90 million households in the U.S. have less than $100,000 in investable assets (approximately 70% of investors), which is a threshold some advisors are using to judge applicable clients.

The robo-advisor space has been able to demonstrate that technology not only provides the ability to scale professional financial advice, but also the ability to do so at the fiduciary level. In a recent Time Op-Ed piece, The Retirement Risk We All Share, blooom’s president, Greg Smith, explained that presently, in a world where pensions are gone and the future of social security is an enigma, too much is riding on employer-sponsored accounts not to implement a fiduciary standard around their management. Pointedly, he states, “[i]n a world where we are left to fend for ourselves in retirement, the stakes are too high not to at least make sure that someone is legally obligated to tell you the right thing to do.” And robo-advisors are positioning themselves to be exactly that “someone”.

And yet, some in the industry continue to suggest that a “robo” cannot replace that “someone” and therefore, will ultimately fail. The key to success with the so-called robo provider is speaking in a language the average investor can understand and making available direct lines of communication with the client. Investors, at all asset levels, want to know their best interests are put first and that there is a trusted source taking care of their nest egg.

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