Author Archives: Reeve Conover

Fear Must Not Inhibit a Financial Strategy

Too often, it persuades investors to make questionable moves.

 Provided by Reeve Conover

 Fear affects investors in two distinct ways. Every so often, a bulletin, headline, or sustained economic or market trend will scare them and make them question their investing approach. If they overreact to it, they may sell low now and buy high later – or in the worst-case scenario, they derail their whole investing and retirement planning strategy.

Besides the fear of potential market shocks, there is also another fear worth noting – the fear of being too involved in the market. People with this worry are often superb savers, but reluctant investors. They amass large bank accounts, yet their aversion to investing in equities may hurt them in the long run.

Impulsive investment decisions tend to carry a cost. People who jump in and out of investment sectors or classes tend to pay a price for it. A statistic hints at how much: across the 20 years ending on December 31, 2015, the S&P 500 returned an average of 8.91% per year, but the average equity investor’s portfolio returned just 4.67% annually. Fixed-income investors also failed to beat a key benchmark: in this same period, the Barclays Aggregate Bond Index advanced an average of 5.34% a year, but the average fixed-income investor realized an annual return of only 0.51%.1

This data was compiled by DALBAR, a highly respected investment research firm, which has studied the behavior of individual investors since the mid-1980s. The numbers partly reflect the behavior of the typical individual investor who loses patience and tries to time the market. A hypothetical “average” investor who merely bought and held, with an equity or fixed-income portfolio merely copying the components of the above benchmarks, would have been better off across those 20 years. In monetary terms, the sustained difference in performance could have meant a difference of hundreds of thousands of dollars in earnings for an investor across a lifetime, given compounding.1

Other people are held back by their anxiety about investing. They become great savers, steadily building six-figure cash positions in enormous savings or checking accounts – but they never sufficiently invest their money.

That confusion comes with a severe potential downside. Just how much interest are their deposit accounts earning? Right now, almost nothing. If they invested more of the money they were saving into equities – or some kind of investment vehicle with the potential to outrun inflation – those invested dollars could grow and compound over time to a degree that idle cash does not.

A large emergency fund is a great thing to have, but it can be argued that a tax-advantaged retirement fund of invested dollars is a better thing to have. After all, who retires on cash savings alone? Tomorrow’s retirees will live mainly on the earnings generated from the investment of the dollars they have saved over the decades. Seen one way, a focus on cash is financially nearsighted; it ignores the possibility that even greater abundance may be realized through its sustained investment.

Fear dissuades some people from sticking with a long-term financial strategy and discourages other people from developing one. Patience and knowledge can help investors contend with the fears that may risk hurting their retirement saving prospects.

Reeve Conover may be reached at 843-800-8190 or reeve@reevewillknow.com.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Citations.

1 – zacksim.com/heres-investors-underperform-market/ [5/22/17]

Small Businesses overpay for 401k plans

This article was published in MarketsInsider on 12/13/17.  Click Here for the full article.

America’s Best 401k took a closer look at the asset-based fees paid by small business owners and their employees and found that many overpay for their 401(k) plans… The industry has reported (on page 50 at the link here) a median cost for plans with 100 participants or more, and $1 million or more in assets, of just 0.93% of plan assets per year, with the rate dropping sharply as assets exceed $10 million and more to as low as 0.27% of plan assets per year. It’s a different story for small plans, according to America’s Best 401k’s new white paper: fees are considerably higher, nearing 2% of plan assets per year in the case of one provider.”

You are required to Benchmark your fees annually.  Are you aware of how much you plan really costs?

 

Is your Multiemployer retirement plan safe?

The U.S. District Court for the Northern District of Alabama has sentenced a former multiemployer plan fund manager to make restitution in the amount of $45,896 and serve five years of probation, including six months of home confinement, for violating the Employee Retirement Income Security Act (ERISA).

The action follows a U.S. Department of Labor (DOL) Employee Benefits Security Administration (EBSA) investigation that determined Brandi Box Stephens, as fund manager for the Iron Workers Local Union No. 92 Welfare Plan and the Iron Workers Local Union No. 92 Pension Plan, altered her own paychecks by increasing the amount she was due, as well as issuing additional payroll checks to herself by securing signatures of plan trustees and changing the name of the payee on the check to match her name.

In addition, Stephens entered false information on the paper stubs attached to the physical checks, and made fraudulent entries into the plans’ accounting records.

She has been barred from acting as a fiduciary for five years.

“Theft from retirement plans and pensions has significant adverse effects on the livelihood and peace of mind of workers,” says EBSA Regional Director Isabel Colon. “Our Department takes these actions seriously and will continue to investigate any action that threatens retirement benefits workers have earned.”

Oxford no longer pays for followup care in the ER

Emergency Room Follow-Up Care Will No Longer 
Be Reimbursed as a Covered Expense

Letter to Oxford Members


We are mailing a letter to Oxford members who have recently gone to the emergency room for follow-up care. The letter will let members know where follow-up care is covered and that where they go for medical care affects how much they have to pay out-of-pocket.

Oxford medical plans do not cover follow-up care services received in an emergency room.* If an Oxford member chooses to get follow-up care in an emergency room, the claim will be denied and the member will be responsible for the total cost of the visit.

Action required of producers.
Please be familiar with this letter, should your clients have questions. Members are encouraged to get their follow-up care after an emergency room visit (like stitch removal or a bandage change) from their primary care physician (PCP) or the appropriate specialist based on their care needs. Members with urgent needs also can get follow-up care at an urgent care center that participates with their Oxford network.**

More information.
Oxford members who have questions about their options for receiving covered medical care, including care following an emergency room visit, should call the toll-free phone number on their health plan ID card. For help with choosing a PCP or locating a participating (in-network) urgent care facility, members can also call us at this number or use the online provider search tool on their member website.

NY Essential Health Plan Future threatened?

From HealthAffairs 12/8/17.  For the full article, click here.

“The Basic Health Program (BHP) is an alternative that the Affordable Care Act offers states to provide health care coverage to their low-income uninsured population. States that choose to participate in the BHP offer “standard plans” to their residents with incomes between the Medicaid expansion level and 200 percent of the federal poverty level who are not eligible for employer coverage or other government programs. BHP coverage may be more affordable for enrollees than exchange coverage and can smooth transitions between Medicaid coverage and the private market.

To fund BHPs, the ACA requires the federal government to transfer to states funding “equal to 95 percent of the premium tax credits under section 36B of the Internal Revenue Code of 1986, and the cost-sharing reductions under section 1402, that would have been provided for the fiscal year to eligible individuals enrolled in standard health plans in the State if such eligible individuals were allowed to enroll in qualified health plans.” New York and Minnesota are the only states that have to date created BHP programs.”

So if the federal government doesn’t fund the “cost-sharing reduction payments” (based on President Trumps executive order not to make those payments) by the end of the year, NY will lose what is claimed to be $1 billion in funding.

Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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