401k Q&A

Q: It seems like most people are saying this AT&T/Time Warner deal is going to get approved soon and I’m thinking their stocks are going to get a nice boost if it does. Is there a way I can invest in those companies in my 401k?

A: Awesome question! Sure feels like this dance has been going on for the last decade, right? Cost analysts seem to think the deal will go through, but then again, analysts are wrong all the time. And, even if it seems likely they’ll get this right, it still doesn’t guarantee a positive outcome for both stocks or either of them. Individual stocks are tricky and it’s nearly impossible to know how a stock is going to react to headlines like this, especially when the story has been drawn out for such a long time. When we talk about mergers, sometimes both stocks react positively, sometimes both react negatively, and sometimes one goes up and one goes down. Over time, things tend to get sorted out, but the bottom line is that investing in individual stocks is simply too risky/stressful for most people, in our opinion. And unless you work for either of them, odds are you won’t be able to invest solely in one or the other inside your 401k. Don’t fret, since it’s probably best for most folks in the long run anyways, regardless of what you think of these two companies and what the deal may or may not mean for their future.

Got a question for us? Ask away!


The information is provided for discussion purposes only and should not be considered as advice for your investments. The information does not represent a recommendation to buy or sell securities. Please consult an investment advisor before you invest.

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Pig playing soccer goalkeeper

Kick in More Now for Retirement: That’s the GOOOOOAAAALLLLL

Right now, in the thick of the FIFA World Cup, teams from across the globe are vying for the coveted gold trophy with the World Cup Final match taking place on July 15th. While these world-class soccer players aren’t likely focused on making any (ahem) BIG saves for retirement right now, they should be. According to the Telegraph, the average soccer career lasts only eight years with a standard retirement age of 35.

A More Offensive Game Plan

Considering the average World Cup player right now is in their mid-to-late 20s, according to Statista, these professional athletes need to be kicking in as much savings as they can to set themselves up for a successful financial life and a sustainable retirement. There’s only one Ronaldo, one Messi, one Beckham, so establishing the financial security needed to retire after a less-than-a-decade career can feel too far out of reach for most others.

Off the pitch, the savings a typical 35 year old should’ve netted at this point has received a lot of attention lately. A study published from Fidelity recommended having twice your annual salary saved for retirement by age 35. Considering the weight of student debt and the outsized cost of housing plaguing millennials, this number feels very out of reach for most of the population in or nearing their 30s.

While the amount you save is vital, what isn’t gameplanned enough is how you’re saving. You can argue that you can save all you want, but if you’re simply holding your savings in cash, it won’t be in the position to grow enough to enable you to retire. After you establish the habit of saving, you must maximize your ability to grow your investments.

More Coaching Required

Two big determinants of investment growth are derived from minimizing fees and maximizing returns, and Americans need help with both. Data from the Census Bureau suggests that 79 percent of Americans work for an employer that sponsors a 401k-style retirement plan, but only 27 percent know how much they’re paying in fees on their 401k accounts, according to a study by TD Ameritrade.

Fortunately, by hiring blooom as your trusted advisor, you can rest assured that we’re working on your behalf to reduce investment fees wherever we can. We make managing your 401k simple, smart and affordable by leveraging the right funds for your goals with lower fees to optimize your retirement savings, no matter what age you are. That’s our GOOOOAAAALLLLL.

Not a blooom member? Here’s your best shot … join now.

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The fees are falling! The fees are falling!

You might say our tried-and-true way to a healthier 401k is starting to catch on – partly through the leveraging of lower fund fees. According to a recent report from the Center for Retirement Research at Boston College, a growing number of lawsuits against plan sponsors (employers) are starting to put the spotlight on hidden fees hitched to high-cost funds.

This is obviously a good thing, but just remember: Although this is leading some companies to tweak their fund offerings with lower fees, they still may not have their employees’ best interests in mind, but rather to avoid getting hit with further litigation. What’s more, because of the lack of specific guidance from the Labor Department, employers may not even know of their rules violations until the agency comes after them or they’re greeted with a lawsuit.
Of course, the fallout from increased litigation could lead to lower fund fees for many employees, but it could eventually leave an opposite impact on those with a 401k plan who work at smaller companies.

That’s because the largest plans with the most assets are usually the ones more able to negotiate lower fees, with small employers least equipped to handle the complexities of fund fees. Plus, as the threat of litigation escalates, so too could the potential threat of a discontinuation of smaller 401k plans altogether.

Fortunately, with blooom as your trusted advisor, you can rest easy knowing we’re making the most of what’s available to you by reducing fees wherever we can. We make managing your 401k simple, smart and affordable by leveraging the right funds with lower fees to optimize your retirement savings.

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401k Q&A

The following questions are real, and we hope our answers are real helpful. See what’s on the enquiring minds of our actual members as we tackle anything and everything (you’ll see) happening with regards to their – and your – 401k.

 

“I’m on vacation and turned on the news this morning. I’m four years away from retirement and wondering what you’re going to do with my account if/when Trump starts WWIII.”

My first most important piece of advice for you while you’re on vacation, especially given everything going on in the world right now is to avoid the TV and as much access to the outside world as possible. Secondly, even in the unlikely event that we were to find ourselves in the middle of WWIII, no one knows what that would mean for stocks. I think we can be pretty certain that in the short term we’d see some significant volatility, but shockingly, stocks have actually done extremely well historically during just about every major war. History can be comforting, but there are of course no promises that another war would see the same results for stocks. Rather than trying to guess or panic and risking future growth on your account IN retirement, it’s important to remember that this is exactly why global diversification using both stocks AND bonds is so important. A heavy portion of your account should be held in fixed income, which potentially reduces any stress to your portfolio.

 

“Since Bitcoin is under $10k again, I want in. How can I do that in my 401k? And tell me why I shouldn’t. It is the future of money after all.”

Don’t mistake Bitcoin and other cryptocurrencies for an investment, especially in an account with a very high priority goal like retirement. First off, you’re not going to have a way to get exposure to cryptocurrencies in your 401k as things stand today. And even if you could, I wouldn’t put anything into Bitcoin or other cryptocurrencies that you wouldn’t be okay losing all of within your first 20 minutes of entering a casino.

 

“I was wondering if medical marijuana stocks are worth betting on in their current early stages. I would love some more insight on who to keep my eyes on.”

We’ll be blunt: Although individual stocks are outside our area of expertise, any investment in a single stock or sector is going to carry a higher risk than a diversified portfolio. So, it’s important to keep the investment to a small portion of your overall wealth. There may be some funds or ETFs targeted at the sector, and that would be a good way to diversify more than a single stock. In most emerging sectors, it’s very hard to predict which companies in that sector are going to succeed. You could be right on the success of the sector, but pick the wrong stocks within that sector and miss the gains entirely. A sector fund or ETF is a good way to minimize that risk.

 

*The information is provided for discussion purposes only and should not be considered as advice for your investments. Investing involves risk. Your investments are subject to loss of principal and are not guaranteed.

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CEO passes the torch

CEO Chris Costello Passes The Baton

Five years ago, Kevin Conard, Randy AufDerHeide and I started meeting to talk about our big idea: A company that could change the way average Americans without huge retirement accounts saved for retirement. We would put our kids to bed and then work into the wee hours of the morning in Randy’s basement. Never did the three of us imagine that five years later, we would have built the company that exists today. We have 30 employees who manage more than $2 billion for almost 20,000 clients all across the country, using a totally disruptive technology model.

In the beginning, we just sought to build something to help average Americans get access to professional financial help. Especially the vast majority of folks who don’t have huge retirement accounts – folks just like my own mom and dad.

A Growing Company

Once blooom launched, I had in the back of my mind the thought that we might reach a point at which the company’s size and complexity would require someone with a much more expansive “executive tool kit” and experience to take the company to the next level.

In 2016, we hired Matt Burgener as our chief marketing officer. I know a few of us thought that if I was to get hit by the proverbial bus, Matt would be a great candidate to take the CEO spot. He has an impressive background and was so committed to blooom’s mission that he relocated his family from Dallas to Kansas City to join the company.

Well, I am relieved to tell you that I did not get hit by that bus. But after working closely with Matt over the past 15 months, it has become abundantly clear to me and those around me that Matt is the right person to take over as CEO to lead blooom into the future. I’m thrilled to report that Matt’s experience and counsel played a huge role in blooom’s rapid growth over the past year and a half.

What’s Changing Now

After much discussion with Kevin, Randy and my wife, and with the support of the blooom Board of Directors, I am transitioning the role of CEO to Matt.

I will stay on as chairman of the blooom Board of Directors, and I will remain deeply involved at the company level. I will continue to do what I love – help people secure their futures by saving and investing wisely. To that end, I’ll happily continue to be the face of blooom externally, doing media appearances and speaking engagements, acting as chief evangelist and leading client education, among other things.

This was not an easy decision, but I have always felt I would do what is in blooom’s best interest. Truthfully, I now believe this is a situation in which blooom gets to have its cake and eat it, too, because we’re both playing to our individual strengths. Matt is a seasoned executive with deep experience in scaling companies, and I get to focus on the things I do best: speaking externally about our mission to change average Americans’ financial lot in life.

Looking Forward

I’m excited to see how blooom will grow in this next phase under Matt’s leadership, and I look forward to continuing to build on our goal of bringing simplified financial advice and services to millions of Americans.

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