News and Articles

  • Most 401(k) Participants Ignore 2Q Volatility

    09/09/2010

    Howard Stock at BankInvestmentConsultant.com reported that "Retirement plan participants are calming down, according to a Mass Mutual analysis of its plans."

    It is further reported that "Only 4% of participants made changes to their 401(k) allocations in the second quarter, despite volatile a S&P 500 Index, which fell 11.4% over that time period."

    Mass Mutual stated that "...we have been aggressively communicating with them on the importance of saving consistently and adhering to a long-term investment strategy,” 

    We concur with what Mass Mutual tried to educate participants, both in terms of savings and a long-term investment strategy. We would further like to point out that, however, a long-term investment strategy that has been sound and conservative. Being conservative and nimble is particularly relevant and important in current uncertain economic situations. Buy and hold asset allocation should be part of an overall portfolio but one should not blindly buy and forget. 

    ... full article ...

    labels:investments,401k,IRA,

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  • How to Tell If You Have a Good 401(k) Plan

    08/24/2010

    Emily Brandon on US News stated several factors to decide how a 401(k) plan is:

    Employer Contributions

    Waiting Period

    Vesting Schedule

    Investment Choices

    Plan Costs

    Responses to Employee Needs


    For practical reasons, participants do not have a choice: the plan is there. It is hard to believe people choose a job solely based on a company's 401(k) plan quality. Certainly, knowing the above factors and then trying to tell your human resources or benefit people to change/improve a plan is one possibility.

    But one thing is certain: participants can take care of themselves by doing a better job in terms of evaluating and understanding the available investment choices in a 401(k) plan. Knowing your options and applying a sound investment strategy such as the ones provided by MyPlanIQ is one way. Moreover, making a better decision for rollover your previous 401(k) to current 401(k) or just go directly to IRA (and which brokerage?) could certainly help. That is why MyPlanIQ's PlanRatingIQ can help. We will have more articles on these topics in the coming months.


    ... full article ...

     

    labels:IRA,401K,Investment,

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  • Rethinking Gold: What if It Isn't a Commodity After All?

    08/23/2010

    Jeff Opdyke at Wall Street Journal wrote the following article in the journal's weekend edition. In the article, the author stated that instead of thinking of gold as a commodity, it is more appropriate to view gold as a shadow currency. Here is what the author had to say: 

     

    "This won't sit well with some people: Gold isn't a commodity. There. I've said it.

    But before you fire off an angry response, hear me out. The facts might change your view of gold's role in a portfolio.

    ...

     

    Instead, "gold is a currency" whose daily price is a gauge of the market's concern about the "potential diminishment" of the purchasing power of the dollar and other paper currencies, says Paul Brodsky, a principal at New York's QB Asset Management.

    If he is correct, it is the potential longer-term weakening of the dollar that is the real issue for the gold market, not inflation or deflation."

    A couple of key statistics to back up his claims:

    1). "I recently asked research firm Ibbotson Associates to run a correlation study to determine how closely inflation and gold-price movements track each other. You would expect gold, as a purported commodity, and inflation to move in tandem.

    The data, going back to 1978 and capturing an inflationary spike, shows a correlation of, at most, 0.08."

    2). "Going back to 1973—a period that defines the modern, non-gold-backed dollar—the greenback's movements closely track gold's direction. The correlation between month-end gold prices and the Major Currencies Dollar Index, as reported by the Federal Reserve, is minus-0.45.

    That clearly is a stronger correlation than you find with inflation. But let's take this a bit further. Let's shorten the time frame to the period from gold's 1980 peak to today.

    The result: Over the past 30 years, the correlation between the dollar and gold is minus-0.65—a high negative correlation. It means the dollar and gold are effectively on opposite ends of a seesaw. When the dollar is in favor, gold retreats. When it is under pressure, gold prices swell."

    We at MyPlanIQ view Gold could be an asset class on its own. Though we classify Gold as part of commodities asset class, our system will pick up Gold and/or other broad base commodity index if the markets think so. Thus, for a plan with Gold such as GLD as its candidate fund, our tactical asset allocation will have exposure to gold when it sees fit, while still controlling the risk and diversification. We will not go gang buster to put our portfolio entirely in gold but a healthy exposure is good dose of anti dollar weakness and anti inflation. 

    ... full article ...

    labels:investment,

    Symbols:GLD,

     

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  • Young Millionaires Skeptical of Need for Advisors

    08/18/2010

    Pamela J. Black on BankInvestmentConsultant.com reported that 

    "Young millionaires doubt the value of financial advisors, according to Spectrem Group.

    According to the Chicago-based company’s monthly newsletter, millionaires under the age of 45 say that they prefer self-directed investing and they find the services of a professional advisor to be too expensive.

    ...

    Spectrem recommended that advisors do three things to attract younger millionaires: Provide information about both high- and low-risk investments since young millionaires want to protect their wealth and grow it; invest in online applications; and provide in-depth technical information in articles on your website."

    It is not surprising to us to read such a report: for persons who have time and skills to learn and manage, MyPlanIQ strives to provide wealth of information and an effective system to bridge the existing gap. However, some advisors do provide value added in terms of personal tailored information and advice. 

    Full story. 

    labels:investment,

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  • PlanRatingIQ Rates Effectiveness of Plan Investment Choices

    08/17/2010

    MyPlanIQ recently released Plan Investment Choices PlanRatingIQ to help gauge quality of investment choices provided in vast retirement IRA, 401K, 403B, 457 plans, variable annuities, variable universal life and college savings 529 plans. Unlike other services, PlanRatingIQ looks at it from the participant’s viewpoint – what returns they could achieve with the plan.

    This is a significant step forward in order to help many participants evaluate various plans so as to better position and manage their investment portfolios. Returns is what they care about. Good returns are derived from minimizing the various fees charged and ensuring high quality investment choices.

    MyPlanIQ Plan Investment Choices PlanRatingIQ uses the following rigorous methodology:

    Step 1: Evaluate investment fund menu in the following three key categories and derive relative scores in each category:

    1. Fund Quality: MyPlanIQ uses fund risk adjusted returns to derive a score for each fund available and derive a combined score in this category.
    2. Diversification: MyPlanIQ measures how the available funds represent major asset classes including the following: U.S. Equity, International Equity, Emerging Market Equity, Real Estate Investment Trusts (REIT, both U.S. and International), Commodities, Fixed Income (both U.S. and International). In addition, minor asset classes such as high yield bonds, various maturity treasury bonds and  large/mid/small cap stocks are measured.
    3. Portfolio building: In addition to the above two categories, it has been found that correlation of funds in various market conditions plays a critical role in portfolio return and risk. For example, a stock fund that invests mainly in high quality large cap stocks may behave differently from a stock fund that invests in volatile low quality small cap stocks in a bear market or a rising bull market. In addition to asset classes diversification, such correlation can affect a portfolio performance in a meaningful way. Extensive simulation using MyPlanIQ portfolio simulation capability is performed to derive a relative score in this category.

    Step 2: Combine the scores in these three categories to arrive an overall rating score by assigning proper weights to scores in the categories.

    PlanRatingIQ adds a critical component to today’s mostly fee and policy based 401K plan ratings such as BrightScope’s 401K rating: for plan participants, the most important factor, after all fee and company benefit considerations, is how to derive most investment returns out of a given investment menu in a plan. It helps plan participants and investors alike to evaluate and improve investment funds selected by a provider. Combined with MyPlanIQ’s investment model portfolios based on time proven asset allocation strategies, investors now have a suite of tools to manage their day to day investments.

    The following are some applications of PlanRatingIQ for plan participants:

    • Evaluate a plan’s investment menu design among many 401K plans they have had for various jobs held. This will help them to decide whether to rollover an existing 401K plan to a new 401K plan of a company currently they have a job at.
    • Evaluate whether it is worth to roll over from an existing 401K or IRA to another IRA in a brokerage.
    • Help investors to choose the best plans among available plans: this is especially true for many ETF based IRA/taxable brokerage plans MyPlanIQ supports. Those ETF plans are either MyPlanIQ SIB (Simpler Is Better) plans or lazy portfolio based plans proposed by investment gurus.
    • Evaluate multiple plan choices an organization sometimes provides. This is especially true for a non-profit organization such as a public employer (ex. state universities or city/county governments).
    • Many times, investors are presented by brokers with various variable annuities. Investors had to rely on their intuition and experience to evaluate these plans and sometimes made random choices. Now, investors can utilize PlanRatingIQ to evaluate and choose a variable annuity with better investment choices.
    • Evaluate and compare how a company’s plan performs among its peers in a same industry, region or even national wide.

    For plan providers, PlanRatingIQ helps to evaluate an existing plan investment choices and further improve the design of a plan.

    As of today, among thousands plans in MyPlanIQ database, the following are the top 20 plans based on PlanRatingIQ.

    Plan Name TAA 5Yr Return SAA 5Yr Return Diversification Fund Quality Portfolio Construction Overall Rating
    WACHOVIA SAVINGS PLAN 14% 6% 95% 82% 98% 92%
    Schwab OneSource Select List Funds 17% 9% 98% 79% 97% 92%
    Ampac Fine Chemicals LLC Bargaining Unit 401(k) Plan 15% 7% 93% 80% 100% 92%
    RETIREMENT SAVINGS PLAN OF BNY SECURITIES GROUP 14% 7% 93% 86% 95% 92%
    MONSTER WORLDWIDE, INC. 401(k) SAVINGS PLAN 12% 7% 87% 89% 97% 92%
    TD Ameritrade Premier List No Transaction Fee Mutual Fund Plan 13% 6% 98% 88% 85% 90%
    COMPUWARE CORPORATION ESOP/401(k) PLAN 14% 6% 89% 74% 99% 88%
    PEPCO HOLDINGS, INC. RETIREMENT SAVINGS PLAN 11% 6% 91% 85% 88% 88%
    WESTERN DIGITAL CORPORATION 401(k) PLAN 10% 5% 74% 92% 92% 87%
    HESS CORPORATION EMPLOYEES’ SAVINGS PLAN 14% 6% 89% 71% 96% 87%
    Polaris Electronics Inc 401K Plan 14% 6% 62% 99% 96% 86%
    Polaris Electronics Inc. 401K Plan 14% 6% 62% 99% 95% 86%
    EMC Corporation 401(k) Savings Plan 12% 6% 85% 71% 98% 86%
    TELLABS 401(k) PLAN 14% 8% 60% 98% 97% 86%
    Societe Generale Employee Plan by Putnam Investments 11% 5% 77% 75% 100% 85%
    FMC CORPORATION SAVINGS AND INVESTMENT PLAN 11% 5% 70% 82% 99% 85%
    PS 401(k) PROFIT SHARING PLAN 12% 5% 70% 90% 92% 85%
    Franklin Templeton Profit Sharing 401(k) Plan 11% 6% 89% 81% 84% 85%
    Schwab Select Annuity 14% 6% 90% 67% 93% 84%
    PROGRESS ENERGY 401(k) SAVINGS & STOCK OWNERSHIP PLAN 12% 6% 67% 88% 94% 84%

    The following is the list of ETF plans ranking.

    Plan Name TAA 5 Yr Return Annualized Overall Rating
    Vanguard ETFs 15% 59%
    Six Core Asset ETFs 15% 54%
    Liquid ETF Plan 12% 52%
    iShares ETFs 10% 49%
    Six Core Asset ETFs Most Popular 11% 47%
    Fidelity Commission Efficient ETFs 9% 46%
    Schwab Commission Efficient ETFs Including iShares 9% 45%
    Diversified Major Asset ETFs Goldman Sachs Global Tactical Asset Allocation 4% 43%
    David Swensen Six ETF Asset Individual Investor Plan 11% 42%
    Five Core Asset Fixed Income Treasury Most Popular ETF Index Funds 11% 36%
    ShareBuilder 401K ETFs 10% 32%
    Five Core Asset Index ETF Funds 14% 32%
    Fidelity 25 Commission Free ETFs 9% 27%
    FolioInvesting Basic Allocation Folios ETF Plan NA 26%
    Five Core Asset Most Popular ETF Index Funds 10% 25%
    CNBC Model ETF Diversified Global Core Portfolio NA 25%
    FundAdvice Ultimate Buy and Hold Lazy Portfolio ETFs 9% 25%
    Four Core Asset ETF Index Funds Emerging Markets 12% 23%
    Four Core Asset Most Popular ETF Index Funds Emerging Markets 10% 19%

    labels:retirement,IRA,401K,ETFs,

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  • Fund Expenses More Important than Five-Star Status

    08/11/2010

  • Products of the Pros: Index Funds

    08/11/2010

  • Should I max out my 401k?

    08/11/2010

  • Schwab Announces Three New Bond ETFs

    08/06/2010

  • Employers Slow to Reinstate 401K Matching

    08/05/2010

  • Target Date Funds

    08/05/2010

  • Making the Most of Your Old 401(k)s?

    08/02/2010

  • Cheaper Choice in 401(k)s

    08/02/2010

  • A 'Dilbert' Guide to Funds

    08/02/2010

  • Calculating how much you need for retirement

    07/30/2010

  • Worried about A Double-Dip

    07/30/2010

  • Practical and Effective ETF Based 401K Plan

    07/29/2010

  • Avoid 401K Rollover Mistakes

    07/28/2010

  • Retirement Blunders

    07/28/2010

  • 5 Problems With Mutual Fund Past Performance

    07/28/2010

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