Smart401k Blog

In my last Common Pitfalls article, I discussed some common diversification pitfalls to avoid. For this article I thought I would go over one more diversification pitfall, investing in company stock.

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In the headlines

A look at some of the market movers over the past week:

• The EU and IMF joined to pledge financial support for Greece
• Healthcare reform legislation finally had its day in the sun
• The IMF warned about the debt levels at many of the world’s wealthiest nations
• The Senate Banking Committee approved the financial reform package

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As an adviser at Smart401k, I get to evaluate and provide advice on a lot of 401(k)s.  Mutual funds and company stock are typically the only type of offerings in an employer plan; however, there have been some of late that have included exchange-traded funds (ETFs) as core holdings.  For those who have a brokerage option through their 401(k), you also have the ability to select ETFs.  So, I thought I’d explain what ETF’s are and some of their pros and cons.  And, since most ETFs track indexes, I will compare them to mutual funds that track indexes.

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In the headlines

A look at some of the market movers over the past week:

• Senator Chris Dodd pushed ahead with his financial reform bill
• China’s currency policy came back into the spotlight
• Concerns rose over who should step in and help Greece
• Bankruptcy concerns rose over movie rental chain Blockbuster

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Did you know that 43% of workers have less than $10,000 saved for retirement; and, only 16% are confident that they will be able to save enough for retirement? I was alarmed when I saw these statistics in the 2010 Retirement Confidence Survey from the Employee Benefit Research Institute (See the full survey here). While the poor economy and the rise in unemployment have helped to contribute to these numbers, the survey really drove home that fact that many people just aren’t doing enough to plan for their retirement.

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I’m now four years into being a parent, and if there’s one thing I’ve learned over the years, it’s that my son’s life requires balance.  Left to his own devices, he would likely sleep as little as possible, only eat foods where the primary ingredient was sugar and watch Star Wars for 10 hours a day.   As much as this would temporarily please him, my focus is on his future.  He has a strict bedtime, sweets are kept to a minimum (unless he’s at his grandparents) and he’s exposed to a good mix of learning, playtime, family and friends.  This balance will give him skills that are multi-dimensional and lay the foundation he needs to succeed later in life.

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In the headlines

A look at some of the market movers over the past week:

• Bipartisan talks on financial reform broke down, so Democrats will now push forward with their own bill
• MetLife agreed to buy AIG’s Alico unit for $15.5 billion in cash and stock
• Greece’s financial problems remained in the world spotlight
• Sanofi-Aventis and Merck are set to create a market-leading joint venture in the animal health market

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In my last common 401(k) pitfalls article I discussed a few advanced distribution strategies.  For this article I thought I would take a step back and discuss a couple things to avoid regarding the diversification of your account.

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In the headlines

A look at some of the market movers over the past week:

• Job losses were less than expected and the unemployment rate stayed at 9.7%
• The Fed’s Beige Book showed continued economic improvement, though winter storms took their toll
• There was unrest in Greece as the country took on austerity measures in hopes of paving the way for European Union aid
• Prudential agreed to buy AIG’s Asian life insurance unit for $35.5 billion

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Last Friday, I had the opportunity to attend a speech by Alan Barkema at the Kansas City Federal Reserve.  He’s the senior vice president of the Research Division and Director of Research for the KC Fed.  It was a great experience to visit the new(ish) Fed building and hear from a very experienced and very knowledgeable economist.

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