Category : investing

samsung stock galaxy note 7

No, this isn’t another shipment of Samsung Galaxy Note 7 phones.

It’s really a set of flares being deployed by a C-130. But a great lesson can be found here about Samsung stock and investing in general.

On August 19th (with Samsung stock trading at near an all-time high of $23.55) Samsung launched its Galaxy Note 7 with a great amount of fan-fair. It was bigger than previous versions, it was waterproof, it had an iris scanning camera…oh, the excitement!!!

But it didn’t take long to discover it had another feature – it explodes. Five days later the first Note 7 explosion occurred and with it the stock begins to implode. And as of October 11th, 2016 the stock was trading at $19. That’s a 19.3% loss in value in less than two months. Poof.

Here’s the deal, somewhere in America there was probably a 401k participant that worked at Samsung that decided to “load up” on Samsung stock. And why not? At the time Samsung had one of the greatest competitors to the iPhone, probably had some nice fundamentals and promising future.

This 401k behavior is a nationwide problem. In fact, Proctor & Gamble has 37.7% of its $3.1 Billion Savings Plan allocated to company stock, the $12.9 billion Honeywell International Inc. Savings and Ownership Plan has 29.8% in company stock, the $19 billion Chevron Corp. Employee Savings Investment Plan has and astounding 46.7% in company stock and General Electric Co.’s $27.5 billion GE Retirement Savings Plan contains 35.5% in GE stock. Data for all of these plans are for the year ended Dec. 31, 2014.

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Why should 401k Advisors care about financial wellness?

Financial wellness…What exactly is it and what’s all the buzz about anyway? For starters, here’s a quick overview, along with three reasons why plan level advisors really should start taking financial wellness seriously.

Financial wellness is the state of personal knowledge and access to resources to plan for and help manage fundamental financial events, which everyone is likely to face – budgeting, saving, transacting, borrowing, protecting, and investing. The typical talking points about financial wellness revolve around how financial instability affects employees and employers – lost productivity, increased work comp, medical and disability claims, theft, turnover, etc. Important stuff?! Advisors SHOULD care, but so far it doesn’t seem like advisors are fully on board. Maybe it’s simply due to the fact that nobody’s honestly discussed how it affects your piece of the pie.

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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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Class of 2016 – Change the world, but try this first!

Change the world. Find your passion. Make a difference. The number of cliché phrases used as words of advice in commencement speeches would provide for a pretty great drinking game…which I’m sure already exists (à la, drink every time you hear a cliché). The truth is that yes, all of those encouraging words are inspiring, but there is no actionable first step for a graduate to take to accomplish those things. Life is complicated and there are far too many words of advice to fit into a blog post.

One of the areas in a graduate’s life that can be the most confusing is finances. So while we can’t help you or your grad “reach for the stars” or find the “road to success” on a map, here are some quick tips to help 2016 grads get started on the right path financially.

Tackle debt head on

There is no greater financial burden to a graduate in 2016 than their student loans and credit cards. The average graduate this year will owe about $35,000 in student loans and $3,000 in credit card debt. Get those credit cards paid off as quickly as possible using Dave Ramsey’s snowball method, and then start making extra payments to those student loans. Get it all out of your life as fast as you possibly can!

Don’t fixate on salary

Understand that a job is about far more than salary, especially in 2016. Now that millennials have become the largest generational group in the workforce, employers are changing the way they approach culture and benefits. Healthcare costs are rising and an employer that offers a Health Savings Account (HSA) with their group plan should really grab your attention. Financial wellness is huge for young workers as well and voluntary benefits that help workers with their financial lives are worth far more than you may realize right now. Consider voluntary benefits and salary as just two pieces of an overall compensation package. And of course, don’t expect to find that perfect job right out of school. It takes time and different experiences to really find what you love. Don’t beat yourself up if you haven’t found your passion by 25.

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