March Newsletter on company retirement plans and systematic investing

Welcome to my March newsletter. I’d like to focus in on two concepts this month: systematic investing and company retirement plans. These two topics, which are somewhat intertwined, affect many of us and our financial futures. If you have further questions at the end which pertain to your individual situation, feel free to e-mail me. I understand the upcoming tax season may present some questions as well.

My first recommendation is that people establish investment accounts with “systematic withdrawal” options for themselves. This is similar to a phone or electric bill which may debit itself automatically each month from your checking account. You’ve probably noticed systematic withdrawals are an easy way to remember to pay annoying bills. The same principal can help you pay yourself. If you don’t save on a monthly basis with small amounts, you probably aren’t hitting your annual savings targets. The reason for this, as many studies have shown, is that saving in smaller increments tends to have a higher success rate than saving in lump sums. The same logic explains why a person may not hesitate to buy coffee and a newspaper each day, but would likely hesitate to pay up front for an annual subscription even if it comes out cheaper.
My next slice of advice applies to two types of retirement plans, the 401k and 403b. Many people (with the possible exception of self-employed individuals) probably have at some point had the opportunity to contribute money (usually through salary deferral) to these qualified retirement plans. They allow you to contribute money on a pre-tax basis and have your funds grow tax-deferred until retirement. I do a lot of work advising individuals and small businesses on how to maximize the opportunities presented by these plans.
If you have a 401k plan at work you should consider the following:
•Am I contributing enough to get a matching contribution? Some companies don’t offer this option in which case don’t worry about it.
•Have I recently gone over my asset allocation? Each person has a different time horizon and tolerance for risk. Its important to understand these traits about yourself. Sometimes it takes a professional to help you do this.
•Am I contributing as much as possible to my 401k or 403b before placing other investments? Most of the time, maximizing your contributions to tax-deferred accounts such as the 401k and other IRA’s before setting up taxable investment accounts will be a wise move.
If you have a 403(b) plan you should be asking the following question:
•Which 403b plans are offered by my institution? Are they all “tax-sheltered annuity” (i.e. insurance) platoforms? or do they offer a lower-cost fund platform instead? The insurance platforms are often pushed harder but less beneficial for participants during the accumulation period. Your organization should have a list of “registered vendors” with whom you can operate your 403b plan.
Thanks, and please e-mail with any questions.
Russell Bailyn

Wealth Manager
Premier Financial Advisors, Inc
14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343 *231
F: 212-752-7673
Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial Advisors are not affiliated entities.

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