Archive - May 21, 2012

1
Chase Loss Shows Hidden Risk In Banks
2
Guaranteed Income Annuities: The Holy Grail of Investments?
3
Who Is On The Hook For Decisions Made In Your 401(k)
4
A Critical Safety Net Is Shrinking
5
How 401(k) Contributions Affect Your Paycheck

Chase Loss Shows Hidden Risk In Banks

The very low interest rates are forcing banks and insurance companies to gamble with their investments to make up for the lower returns they get from traditional investments. These companies are allowed to use hypothetical loss estimates which can be changed. They are allowed to “mark to book value” (the purchase price) or they can recognize a gain when they sell. So these companies are skating on thin ice by taking increasing greater risks to earn money through short term trading like the fiasco at Chase where Chase lost $2 Billion to $3 Billion in bonds CDS contracts.

The risk …

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Guaranteed Income Annuities: The Holy Grail of Investments?


I recently encountered a client who was anxious to liquidate his diversified IRA portfolio to invest in an annuity that guaranteed a set income throughout retirement. The client had been approached by an annuity salesman who touted an annuity guaranteeing an 8% return and even granting a 5.5% bonus just for investing in the product. Substituting easy to understand investment figures, the annuity salesman had informed the client that he could invest $439,000 today, while he was age 56, and in ten years receive $56,000 every year for the rest of his life.

Doesn’t sound like a bad deal, right?
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Who Is On The Hook For Decisions Made In Your 401(k)

Recently Wal-Mart agreed to pay $3.5 million to settle a lawsuit filed by its employees claiming that the country’s largest employer failed to properly supervise the company 401(k). There have been other similar suits and more will come.

Most companies can do a better job in supervising the company 401(k) and the motivation to do so needs to start at the top with the owner of the company or the Board of Directors.

If you are a business owner, on the Board of Directors or serve on the Plan Investment Committee, follow the line of questions from a “hypothetical deposition” …

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A Critical Safety Net Is Shrinking

When we are young it is difficult to peer into the future 20, 30, 40 or more years and imagine needing physical assistance with some of the basic activities of daily living such as dressing or feeding ourselves. The reality of the matter is that many of us will need assistance at some point in our lives, and as medical advances contribute to longer life spans it becomes even more likely that we will need at least some help at some point in our lives. Planning for this stage of life is becoming more complicated as many insurers who provide …

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How 401(k) Contributions Affect Your Paycheck

As you begin a new job, or if you are a longer-term employee who is just starting to make contributions to a 401(k) plan, you are confronted with a question:  How does a contribution to the 401(k) plan impact the final take home pay on my paycheck? Believe it or not, you could actually increase your bottom line assets by reducing your income through a 401(k) contribution.

Let’s work through an example so that we can more completely understand what happens.

Your New Job

So, you’ve started a new job, with an annual pay of $30,000.  We won’t go into …

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