Fix Your 401k

DollarsLeave a comment

Most companies offer their employees a 401k program instead of a retirement plan. Unlike retirement plans, 401k programs differ in that you are entirely responsible for your own money. Your company only sets up the plan and gives you access to it. All the decisions that determine financial success are left entirely up to you. Many people end up with only modest gains in their 401k, because they never learned to take advantage of their 401k. And who could really fault them, even with all the materials provided, the programs can be quite daunting and confusing if you never took a business course in your life. Now I am not a financial wizard or even someone who can manage his money very well, but I do know how to research things I don’t know about, and best of all, I listen to my accountant. What follows is some basic advice on how to go about setting up your 401k, for people who like me, have busy lives and who do not have a business degree.

Easy 401K

The first thing to do is to get information about your specific 401k plan. This is usually available online or in paper form. Usually the online information will have more recent information. What you want to find out is what mutual funds your plan actually offers and what their performance has been. You need to find out what type of stocks each mutual fund invests in. Is the mutual fund primarily a large cap, mid cap, small cap type of fund? Is the fund global, international only, or just US based stocks? Depending on your plan, the online site may offer something called MorningStar summaries or reviews. If they do, print these out. This will give you more information as to how the mutual fund has performed.

Diversify!

Every finance guide will tell you, that diversification is the key to 401k plans, but what does this mean exactly? To diversify your plan, means to separate your money among different types of stocks. For example, the most common way to diversify is to invest in both large cap and small cap funds. When large cap funds do bad, small cap funds go up and vice versa, so if you invest in both, you stand a better chance of making money no matter how the market swings. The other way to diversify is to invest part of your money into international funds, so that you can ride out domestic economy problems. And yet another way to diversify is to have some percentage of stable funds, so that incase all other funds go down, you still make some money. I myself tend to divide my plan to include international, small cap, large cap, and a small percentage of stable funds: around 40%, 25%, 25%, 10%. However I am not a financial advisor, so it would be best to consult your accountant to see what is best for you. Diversification is really about your own personal comfort level. You have to decide which funds and how much.

To some degree, MorningStar ratings help, because they rate most major funds using a simple 5 star system. So if you have a low performing one star fund in your plan, this makes it easier to perhaps exclude that one fund. Though past performance does not mean the fund will be as successful in the future, it is one indicator that the fund is at least being successfully managed.

Opening Your Wallet

Now that you finished your research, and you picked your funds and decided the percentages, it is time to throw in your money, but just how much should you invest in your plan? The answer may surprise you, but you actually have to put in a lot if you want your 401k plan to be successful. First see what your company match is and what your limit can be. The IRS changes the limit based on inflation, so you might be able to invest more than the year before. At the very least, you should invest the exact amount needed for the maximum company match. This is after all free money your company is giving you, so why not take advantage of it.

The best advice I have ever read when it comes to financial matters is that ten percent of what you make is yours to keep. This means that ten percent of whatever income you have, you can save for yourself. Over time this ten percent can grow to be your own personal wealth. If you are not saving ten percent already with all your investments combined, or if you are solely relying on a 401k plan for retirement, the ten percent rule is something you should think about. Believe it or not you can actually live on only ninety percent of your income!

Save Wisely And Prosper

Once you find out how your 401k plan performs, you will be able to gauge just how well your fund choices fared in the market and what you can do to better diversify your plan. And as always, there is plenty of financial information available on the Internet and even at your local library. Whatever time you spend on your 401k will definitely help you in your retirement.

Boys Are Not Girls

RelationshipsLeave a comment

Perhaps it is difficult to see at first, but the kind of father you end up being depends a lot on what kind of father you had. You not only inherit your own father’s good qualities, but also his most profound inadequacies. Over time, you begin to see this in your parenting skills and whether you overcome this is entirely up to you. In my case, my father worked and never seemed to spend any time with us, however a more accurate portrait, is one of a man who did not know how to relate to his children. He could not really communicate with us and so he did not spend much quality time with us at all. As a father myself, I spend most of my time with my family at home, but I too find myself drifting away to fix a computer or clean the garage, instead of spending real quality time with my boys.

This brings me to my point about boys. In general we tend to treat girls and boys differently. Our society is gendered and as the recent school shootings in the news have proven, we are somehow ignoring boys and letting their emotional health suffer in the process. For a while I believed the talk about how society is letting boys fail in order for girls to succeed, and how this is an escalating problem. The reality I think is more simple than that. I think we tend to pick favorites. At times boys are easier to please and vice versa for girls. We tend to let girls get away with things we know they should not, and equally the same for boys. While we expect girls to excel in liberal studies, we expect them to be bad at math. For boys we emphasize their physical roughness and ignore their emotional health, we rather let them run than listen to their feelings. We play favorites depending on the time and place.

While boys are not girls, we should not treat them any differently. Boys need the same skills as girls, they need to be good communicators, they need emotional stability, and they need to be listened to just as much as girls. After decades of trying to equate the sexes as equal, we are still treating them differently and this is what is really unfair. As a father, I need to start listening to my boys, and this is difficult but not impossible. I have noticed that at eight years old, my son is already having a difficult time talking about his emotions.

Crashing The Borders

NBA TalkLeave a comment

As another season of NBA Basketball is almost upon us, I took some time to read Harvey Araton’s Crashing the Borders: How Basketball Won the World and Lost Its Soul at Home. Araton, an experienced sports writer, manages to put together a convincing argument for the downfall of USA Basketball, but like most lovers of the game, Araton can’t help but end on an uplifting note. Whether the NBA will rise back to Jordan spectacle remains to be seen, however there is no denying that D. Wade and Lebron James are making the game fun to watch again.

A Black Man’s Game

Araton takes the issue of race head on and quickly points out that you can’t escape the racial implications in today’s NBA Game. It is not just about black male athletes making a lot of money, it is also about the game’s predominantly white audience. An audience that has ceased being blue collar and who identifies less and less with the inner city; an audience who doesn’t appreciate the athleticism of the game and who is there for the celebrity spectacle than anything else.

Drunk or not, too many basketball fans had reached the point where they objectified the players, could not relate to the them as human beings, or see beyond societal stereotypes and flimsily disguised racial codes. If the imagery of large black men beating on defenseless white fans was alarming, the too-widely accepted pastime of affluent whites feeling empowered to verbally abuse half-dressed, sweaty black men, should have evoked more discomfort and disturbing American historical chapters… The irony was that, the more the fans shelled out for their seats, the closer they got to the action—but the closer they got, the wider the gulf between them and players seemed to grow.

The Loss Of Fundamentals

Araton then goes on to gather several different opinions on the state of basketball, including coaches, teachers, and players. It becomes evident that the NBA suffers from multiple problems, many of them blatantly obvious, but some not so easily perceived. Like other fans of the game, Araton has his own opinions but he is more interested in what others think of the game, from international players who are trying to make it to the big stage, to college academics who disagree with the game’s commercialism, and to the players themselves who are beginning to feel pressured on more than just their playing abilities.