Category : retire

Sir Isaac Newton…astronomer, mathematician, physicist…and super crappy investor.

Newton made a huge impact in the 1700s with his contributions on the Law of Motion, gravitation and by being the inventor of the first reflecting telescope. Stay with us here…he was also a fellow of Trinity College, a member of Parliament, and was knighted by the Queen in 1705.

By all accounts, the man was a freaking genius.

But, Boy Oh Boy, Did He Suck at Investing.

Think about that? How is it even possible that a person this smart could be bad at investing? Simple. And here is the story:

Enter the South Sea Company. This was a company that was established in the early 18th Century. In exchange for assuming England’s war debt, the company was granted a monopoly on trade in the South Seas.

Bingo. Investors loved this. They smelled a huge money making opportunity.

Sir Isaac Newton was no different than any other investor. He too had been charmed into purchasing shares of the South Sea Company and by 1720 after seeing the stock rise rapidly without reason at a fever pitch he rationalized, “I can calculate the movement of stars, but not the madness of men.” So, he cashed out. And profited big time from his investment.

Then he watched as the stock continued to soar THREE times higher than when he sold his shares. We can only imagine the regret he was feeling. As evidence, he went on to repurchase South Sea Company. Only this time he was buying it THREE times higher than when he last sold it.

Briefly, the stock continued to rise. We’re sure Newton was feeling wonderful about his decision. And then things started to go awry. The stock peaked weeks later and then cratered. Newton ended up losing £20,000 (nearly his life savings) which in today’s dollars equates to roughly $3,000,000.

Let That Sink In. Astronomer. Mathematician. Physicist. And….Broke.

Newton, a genius by all accounts, couldn’t pull off investing without letting his emotions get the best of him. Where does this leave you?

Simple. You need to find a professional that can help you navigate the emotional ups and downs of investing. We don’t care where you get help, just get help! Many traditional advisors have $1,000,000 account minimums before they’ll talk to you. Luckily for our clients, we don’t have a minimum and we focus on the ever confusing 401k that you might have set on “auto-pilot”.

Look, this isn’t about your IQ score. 1000s of folks using blooom are super smart people – doctors, teachers, firemen…shoot, we even have financial advisors using blooom for their own accounts! Yes, they are all smart. BUT they’ve come to the realization that it’s best to have someone hold your hand through the inevitable ups and downs you will see as an investor.

Don’t let your investing experience become a history lesson for someone else.

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Politics and your retirement…

We at blooom wanted to write to you with some thoughts on the news you have likely seen that the Trump administration will be seeking to unwind many of the regulations put in place after the financial crisis (Dodd-Frank), as well as a more recent rule designed to protect retirement savers in this country from brokers trying to sell them high fee products, instead of always acting in their best interest (DOL Fiduciary Rule). Political administrations will come and go, lobbyists and elected officials might try to change the rules to serve special interests, but you can rest assured that we here at blooom have always — and will always — only follow one rule: acting in your best interest. In fact, blooom is already a fiduciary and has always upheld itself to the highest regulatory standard in the land. So, on our side, and for our clients – absolutely nothing will change, whether or not the rules get unwound in Washington.

We built blooom to insulate you from the predatory practices rife in the retirement space, by steering you TOWARDS low cost investments, steering you AWAY from alluring sounding investments hopelessly trying to “beat the market”, and by helping you decipher and distill the often hundreds of choices in your retirement account down to an appropriate and well diversified portfolio for your age. Straight forward, boring, non-flashy stuff that the majority of Americans get wrong.

Blooom was built to protect our clients from shenanigans that might happen in Washington or in the financial industry. The latest shenanigan will allow brokers to “sell” Americans retirement products, instead of give them the best possible advice. With blooom on your side, you don’t have to worry about this. We can only hope that fiduciary, simple, low-cost solutions like blooom can reach tens of millions of Americans. That’s the magic of technology. In these uncertain times, make sure you’re covered.

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Dear People Who Want to Retire

I’m 34-years old and barely a millennial. I’ve worked in finance for 10 years, which relatively speaking, is not a long time, but enough to look back with insight and a vested eye on the future. I grew up in Kansas and double majored in History & Sociology at the University of Kansas so I don’t even have a business or finance degree to impress you with. In college, my interests aligned more with understanding socioeconomic status and how groups of people are treated, rather than supply chain management, retirement savings and investment banking. And if I were going to be really honest with you, my biggest concern during my formative college years was making sure there were enough handbills around the KU campus to promote my rock band’s next show at the Granada Theater.

This all changed after my parents’ divorce. Their divorce immediately threw me into the realm of understanding discount points on mortgages, cost basis calculations on taxable investments, and estate and insurance planning in an effort to help my mother. During the marriage, she never earned much and always relied on my father to handle the finances. After the divorce, she had to rely and trust in others. This included an investment professional who, despite my mother being fresh off a divorce, low income, and insufficient savings, put her in a variable annuity. More on that in a minute.

And then there is my wife who, in her late 20’s, also sought guidance in an advisor. At that time, she was single, no kids, had heaps of school loans, zero IRA’s and insufficient emergency savings. Yet, she left a meeting with a trusted advisor with a term AND a whole life insurance policy. What she failed to leave with was a strategy on how to pay off her student loans or a plan for retirement savings.

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There are a Thousand Ways to Save: Pick One and Start Today

We are mid-way through National Save for Retirement Week so it makes sense that it’s also “Brown Bag” your lunch day. There is no shortage of “how to save money” blogs on the internet and maybe I am just feeding the beast by offering my five tips. But the good news is, there ARE thousands of articles out there about saving. So whether you are focused on saving for your “Life After Work” or have other goals like saving to pay extra on your student debt or saving for the down payment on your first home, there is never a shortage of tips to help you along the way. Just pick a few that you like and start saving!

  1. Remove yourself from alerts: It’s hard to resist the temptation of shopping when every day you are receiving emails and text messages about the next “can’t miss” sale. Shut down the impulse noise to keep your budget on track.
  2. Make it a competition: My husband and I follow the Dave Ramsey Cash Envelope System. We take out a certain amount of cash each week that we allocate for our own personal use. We call it our “fun money.” But we still found ourselves putting some incidental purchases on our cards that caused a lot of budget leakage. So we now have a bet. We can only make purchases with our “fun money” cash. Whoever puts any “extras” on the debit or credit card has to treat the other person to dinner and pay for it with their “fun money.” The thought of losing a bet to my husband is a great motivator to keep the plastic in my purse.
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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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