Category : planning

Keep searching for better option than TSP?

Leaving Public Service? TSP = Red Tape You Might Not Cut

Government service is often thankless. I saw firsthand bouncing around the country from town-to-town as the son of a life-long USDA employee. But in comparing notes between my Dad’s Thrift Savings Plan (TSP) and what I know of 401ks, the TSP might be one area where the public sector got it right. How so?

If you’re a person with a 401k, we at blooom often start with a simple question. Know what you’re paying in investment fees? Generally, the answer is no. And the cost of what they’re invested in often surprises them. That’s where we come in to help 401k clients. For people in a TSP, the fee discussion is a little different – on the surface.

And that has more to do with predatory Wall Street practices than the plans themselves.

Investment selection, rebalancing and fiduciary services could help federal employees achieve a better retirement. So, let’s explore why current and former federal employees should consider those services before cutting that last bit of government red tape known as the TSP.

Thrift Savings Plans (TSP) Have Few Investment Fees

TSP participants have access to one of most inexpensive employer-sponsored retirement plans, but only 40% of military service members take advantage of this benefit.

A TSP is a lot like a 401k, but the investment expenses are generally better in the former. Say 20 times better. Compare the average expense ratio of 0.03% for a TSP to the median 401k expense ratio of 0.60% we see pre-blooom rebalance.

Millions of federal workers are in the plans. A 2014 CNN Money article surmised why many millions more are bypassing these low-fee plans (or opting out when they leave their federal job) and perhaps paying thousands more in fees in other retirement savings vehicles.

Read More
Beware the Bull in Retirement Yellow Brick Road

How to Travel Safely Down Retirement Yellow Brick Road

The past few years, we’ve seen a lot of people happily talking about the gains they have been seeing in their 401k accounts. They’re sharing return numbers with others online and in the grocery store. It would seem like the kind of talk you’d want to hear.

Please don’t get me wrong. It’s great to see so many people happy that their retirement accounts are increasing in value. But there is a very important message to convey concerning these high returns.

Like the Lollipop Guild in the Wizard of Oz – IT AIN’T ALWAYS GONNA BE THIS GOOD!

The Facts About Returns Since blooom’s launch

Blooom launched its 401k management service in late-September of 2014. Since that time, the stock market (as measured by the S&P 500*) has had a cumulative return of roughly 28% and has averaged almost 10% per year.  In addition, the Vanguard Total World Stock ETF – a better proxy for blooom clients given its allocation to global equities – is up over 15% year-to-date! The point here is that these past three years have been a good time to be a stock market investor. Hell, it has been a GREAT time to be a stock market investor since the Great Recession (stock market collapse) of 2008-2009.

With all of these happy people, we want to make sure everyone understands that this is not always how things will go. In reality, the market will go down periodically.  In fact – It NEEDS to go down periodically. That is precisely why investing in the market carries risk and this same risk is exactly why investors who have stayed in the market for long periods of time and weathered this risk have been rewarded with much higher returns than “risk-free” investments like CDs, Government Bonds, and money market funds have produced.

4 Key Characteristics of a blooom-managed 401k

If you’re a blooom client, your managed 401k has four key characteristics that other 401k investors may not receive:

Read More
Thanks 1 Billion Clients

Blooom Reaches $1 Billion in Assets Under Management

“Wall Street has made a habit of running in the opposite direction of investors with small accounts…maybe we should build something and run towards them.”

This was written in email from Kevin Conard, my co-founder to me late one night back in January 2013. Four-and-a-half years later that idea has evolved into a company – blooom – and we are proud to announce that we have grown faster than virtually any other robo-advisor. Blooom now manages more than $1 billion of retirement accounts for our clients.

Specifically, thousands of people from all across this country have trusted blooom with what is likely their most important and potentially most valuable financial asset – their employer-sponsored retirement account, or 401ks/403bs, as they are so strangely named.

If you’re a blooom client, I want to thank you for believing in us and starting this journey of bettering your retirement and financial situation together. The entire blooom team works hard every day to help you reach your financial goals.

Every time we receive a message of gratitude from one of our clients, we share it with the team and … everyone gets to work the next day with a sense of pride that they are truly helping people and striving to achieve greatness. Thanks to everyone once again. We will continue to provide our helpful service to all of you — in good times and bad.

Speaking of pride. We also take pride that this Kansas-based company reached the milestone faster than both Betterment or Weathfront – while doing so on a fraction of the capital. They’re peers not so much from a comparable service offering but in that they’re a benchmark for other robo-advisors. In other words, out of the gates, we have grown faster on fewer resources, as one should expect from someone managing their money.

Blooom was started in 2013 to help the traditionally un-helped.

We felt – and continue to feel — that it isn’t fair that the people who needed the help from the financial services industry the most were the least likely segment of the population get it.

You’ve done the hard part: You started saving for you retirement. Thanks for letting us do the rest.

If you haven’t already read blooom’s manifesto — here’s WHY this is all so important to us:

Read More
401k Fees Eat Holes in Money Socked Away

What The Heck are 401k Fees and How Do You Kill Them?

The saying “ignorance is bliss” doesn’t apply to hidden 401k fees. We frequently reference them … and for good reason. According to research from NerdWallet, people with 40 years until retirement could lose as much as $500,000 because of investment fees.

Worse yet. Most people aren’t AWARE they are paying these fees. An incredible 92% of Americans have no idea how much they pay in 401k fees.

We’re going to provide a simple break down of the fees found in your 401k. We’ll also review what, if anything, you can do about them.

Providers Have Three Main Types of 401k Fees

Investment fees are specific to each investment option your plan offers and typically the loftiest type of fee. Luckily, you can usually control – or get help to control – these types of fees. They can be reduced by simply choosing to invest in funds that have lower expense ratios.

Other types of 401k fees, administrative and service fees, are more difficult for you to reduce, as they are an innate part of your provider’s plan.

Here’s the quick overview of the three main types of fees:

  1. Investment fees – Expressed as an “expense ratio” of anywhere from 0.01% – 3%. Our team will call these “fund specific fees” or “fund fees.”They cover the management of the investments within your plan. And they typically represent the largest component of fees. Generally assessed as a percentage of assets invested, they are deducted directly from your investment returns: Investment fees are taken out annually as a percentage of your investment.
    • Sales charges – transaction costs for buying/selling shares
    • Management fees – for managing the assets of the fund, often used to cover administrative expenses
    • Other fees – to address services such as furnishing statements
  2. Plan administration fees – The fees charged to keep your plan running. These fees include recordkeeping, accounting, legal and trustee services that are necessary for administering the plan.
  3. Individual service fees – typically associated with optional features offered under a 401k plan. Some additional services may include access to a customer service representative, educational videos or seminars, planning software, investment advice, or online transactions. The more services provided, the higher the fees. The cost typically corresponds with the size of your employer’s 401k plan, i.e. there are benefits of scale (the following are the typical fees by employer size):
    • 1.4% for small employers
    • 0.85% for medium-size employers
    • 0.5% for larger employers

Investment Fees Pile On – They’re Vermin You Want to Control

We sometimes hear from people that they don’t need to worry about investment fees because their account balance is relatively small. But here’s the rub: Fees negatively affect your 401k (or other employer-sponsored retirement plan) in several ways.

Read More
DayCrunch Pick 24 Time Infographic Game

Time Infographic: Unlock 30 Hours of To-Dos Per Day?

Seven or more hours of sleep per night? That’s what the National Sleep Foundation recommends for adults. A half an hour of exercise each day? Those are numbers from the Department of Health and Human Services. One hour to eat per day – says who? The USDA, that’s who. With so many things to do in life, we decided to crunch all the numbers of what the experts “recommend” you do in a 24-hour period — and the total adds up to 30 hours in this nifty time infographic!

Well, that’s life for you: 30 hours of steps to perform in 24 hours of moves. See how we can free up a move for you!

Meet Our Fictitious Player Kari: She Can Relate to the Time Infographic

Kari’s a 37-year-old single mom with two kids: Jasper, who’s 8, and is always playing baseball; and Cassie, a 4-year-old who enjoys finger painting butterflies.

Kari works full-time at a local department store, and loves picking up her kids from school after work. Once they’re all home, Kari feeds the kiddos, helps them with their homework, puts them to bed, and finally makes sure everything is all set for the next day. After that, she decides to spend some time before bed researching 401ks and financial planning. But 10 minutes into her research, she falls asleep. Her 24 hours are up, but the time infographic says she has six more things to do.

Sound familiar?

A Managed Account Can Help You Lifehack a Move

At this point, you’re thinking the same thing as Kari: How in the world can I get all this done? Life is a tough game. We all have hectic schedules and can relate.

We’re not positive whether you can lifehack your way to all 30 moves. But we do know one thing — a managed 401k account is one lifehack you can play to get closer.

So … what is a managed account?

Read More
1 2 3 4 6