Posts Tagged ‘investment behavior’
Are All Investment Mistakes Investor Mistakes Instead?
Carl Richard’s latest article brings up a very interesting perspective on investing. The following sums is up pretty well,
We’re quick to focus on the reward but fail to appreciate the consequences of our choice. If an investment performs well, we like to think, “I picked a winner.” If it’s the reverse, and the investment fails, it’s someone else’s fault.
Read MoreThe Temptation (and Danger) of Past Investment Performance – NYTimes Bucks Blog
It’s understandable. You are looking to invest in something different in your 401(k), and what is the most accessible bogey to judge the funds in your plan? Past performance. It tugs at the foundation of human nature, greed and fear.
Read MoreConsidering a Roth Conversion? Avoid the Crooks
When we hear about 401(k) investors moving all or a portion of their account to an IRA, the question becomes, “What did they invest you in?” Now, with the new tax law that enables investors to more easily convert their traditional IRA assets to a Roth IRA, brokers, insurance agents, and other financial product salespeople…
Read More401(k) Paternalism – Employers Take More Active Role in Employees’ 401(k) Decisions
This month’s CFO magazine featured an interesting article regarding the change taking place in how employers’ are taking a more paternalistic approach to their employees’ decisions with their 401(k) accounts. Some of the issues that have made paternalism more necessary (not that it’s new news) are as follows:
Read More401(k) Investors’ Achilles Heel #3: Expecting Investment Performance to do All of the Work
I have to give it to the NYTimes. Their new “Bucks” blog includes great insight from our friend Carl Richards of BehaviorGap.com. Just yesterday they posted a very easy to use, interactive 401(k) savings calculator that illustrates how increasing your contributions just 1% creates a very different retirement picture for you upon retirement, while avoiding…
Read MoreWhy There Are No ‘Best’ Investments – BehaviorGap @ NYTimes
As you know, our friend Carl Richards is a writer for NYTimes.com. We have definitely encountered people trying to find the “silver bullet” investment that will magically create huge gains for their 401(k). Unfortunately, this typically results in some really outlandish investment “strategies” and chasing the performance of the “best fund.” The cost of those decisions to their nest egg is tremendous. The following is Carl’s most recent post, and I won’t try to water it down with a summary, for I think every investor should read it.
Read MoreA Model for 401(k) Advice, Pt. 2 – Must be Ongoing
A fiduciary relationship is one which is ongoing, in which the fiduciary is responsible for conducting ongoing due diligence on the various provisions for which they are responsible. A company fiduciary is charged with the responsibility of ongoing due diligence of the various fees, investment options, and vendor capabilities of the plan for the benefit of the participants. An ERISA fiduciary, regardless of the “flavor,” is hired to provide ongoing advice to the employer specific to investment due diligence and advice, vendor benchmarking, etc. Both of these more traditional fiduciary roles are ongoing relationships. Why isn’t employee fiduciary advice?
Read More401(k) Investors’ Achilles Heel #2: Goal-Based Investing – Good or Bad?
This month, our team has conducted dozens of 1-on-1 consultations. During these consultations, we walk the 401(k) investor through an investor questionnaire that takes into account their age, time horizon for accessing their 401(k) assets, and their risk tolerance. During this review of their account, we consistently run into investors who have an expectation of what they need to achieve from a performance standpoint in order to meet their goals. Just as I was considering this, Carl Richards wrote an article (click the napkin to read) specific to whether financial plans are worth the paper they are drawn up on.
Read More401(k) Investor Achilles Heel #1: Overconfidence
From time to time, all of us think we know what we are doing when clearly we do not, but it is not until we are proven wrong that we come to realize it. For me, it’s home repair. I know it’s not my strong suit, but my “man” button keeps blinding me to that fact until I am calling the repairman to fix the original problem and everything additional that I destroyed, broke, etc.
That, my friends, is humility. And humility is good for all of us. When it comes to investing, such overconfidence in our abilities can be extremely costly. In fact, the larger the balance of your 401(k), the more costly mistakes can be to you.
Read MoreBeManaged March ’10 Newsletter – The Advancing US Dollar and Your 401(k)
The following are some of the topics discussed in this month’s newsletter from John Whaley, CFA, AIF, the Director of our Research Department.
Advancing US Dollar Translates to Declining Foreign Stock Returns
Mutual Fund Fees and the Impact on Your Acccount
How Does Your 401(k) Account Growth Compare?