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Market volatility can be hard. We are paying attention and we are here to help.

We also know that sometimes the best way to stay calm is to tune out the chatter. Because of that we don’t want to flood your email with updates during volatility but want you to have the information you want, when you want and need it the most. That’s where this page comes in. Please use it for reference, and know that when we have good, relevant information we will post it here.  To schedule a call to talk about what all of this means for you, click HERE.  

Your 401k Match is Suspended. Now What?

June 30, 2020 BY Shanna Tingom, AAMS®

The recent global pandemic has caused many different types of economic fallout. It has resulted in many companies suspending the matching of their employee's 401(k) contributions. The Plan Sponsor..


Many employees are listening to what financial experts are saying about continuing to contribute to their 401(K) if their employer has suspended matching contributions. These experts explain there are certain factors that should be taken into consideration before deciding to discontinue contributions.

*Other considerations for their 401(k) savings
*The pros of continuing contributions to their 401(k) plan
*Benefits associated with no longer contributing to their 401(k) program

Continuing Employee 401(K) Contributions


Financial experts tell workers it is an added incentive for an employer to match their retirement savings contributions. They advise that even if there is no employer matching funding, a 401(k) plan remains a cost-effective method of saving for their retirement. Employees have already done all the important budgeting decisions to regularly contribute to their 401(k) plan. There is no reason to stop since an employee will continue to get immediate tax savings.

Reasons to Stop 401(k) contributions


A 401(k) is an excellent way to save for the long term. It is also important a person does what is necessary to not neglect their short-term needs. If someone does not have an emergency fund to cover their expenses from three to six months, they may need to redirect some of their 401(k) savings to create such a financial cushion. Should someone not have any emergency savings, they are in a position where they may have to take out a loan or make an early withdrawal from their 401(k) plan. The majority of plans enable participants to take a loan, but it must be paid back. If someone is significantly financially impacted by the recent pandemic, they may need to consider how much they need to use to pay their regular expenses. This may be a situation where a worker suspending their 401(k) contribution could be their best option.

Other Considerations


If a person's finances have not been impacted by the pandemic, but the suspension appears to be permanent, it's time for them to review their investment strategy. Knowing the fees associated with their 401(k) plan is important. Some of the older plans may have high fees. An employee could improve their retirement savings plan by finding a better investment vehicle elsewhere. This could involve investing in an individual retirement account (IRA). A Roth IRA is not a plan that is tax-sheltered. It does permit a person's earnings to grow tax-free. This is one of many other options available for retirement savings.

Young People


It is important younger people continue adding to their 401(k) plan even if their employers don't match their contribution. It is a good way for their money to grow with compounded interest for many years. In many situations, the suspension is going to be temporary. It is an important benefit that provides a company with a competitive advantage when it comes to employee recruitment and retention. In 2008, it is estimated that over 17 percent of companies suspended matching 401(k) contributions. In a few years, the majority of companies reinstated their matching contributions.

Matching 401(k) contributions always have been a perk a company offers its employees. It is common for employees to only contribute enough of their paycheck to their individual 401(k) plan so they can get the matching amount. It is often a 50 percent match on 6 percent of an employee's salary. Individuals close to retirement age may want to consider seeing if their company reinstates their 401(k) contributions. A younger person may want to consider looking at other retirement investment options.

 

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What a wild ride this week!

March 16, 2020 BY Shanna Tingom, AAMS®

WHEW!  I think I have whiplash after this week.  I’ve been an advisor for a very long time, and I’ve never seen anything quite like this.  BUT, there have been a number of short-term periods in the..

Recent history with stocks and viruses is that markets overreact leading to significant buying opportunities along the way. Over a 38-day trading period during the height of the SARS virus back in 2003, the S&P 500 index fell by 12.8%. During the Zika virus, which occurred at the end of 2015 and into 2016 the market fell by 12.9%. There are other examples, but they all passed, and the market recovered and hit new highs. Will this happen again? Our view is that it is highly probable.*

So, why the drastic up and down see-saw this week?   Individual and institutional investors couldn’t really reconcile the BAD news of the spread of the virus with the “good” news of Biden’s Super-Tuesday win and the Democratic race narrowing.  Biden is widely considered a more moderate candidate than several of the others, and more moderate candidates are considered more economically favorable. 

And, what’s ahead?  I wish I knew.  But if this health crisis is like almost ALL of the others (with the exception of the HIV/AIDS Crisis) the period of time following the initial period of panic will be good.  You can see why I feel this way by downloading the comparison HERE.  As you can see:

6-month change of the S&P 500 Index following the start of the epidemic was positive in 11 of the 12 cases, with an average price return of 8.8%.**

12-month change of the S&P 500 Index following the start of the epidemic was positive in 9 of the 11 cases*, with an average price return of 13.6%**

This is why I DO NOT advocate selling out of fear.  This is, however, a GREAT time to buy!  And, any dividends and interest that you get that reinvests during this time will buy you more for your money. 

An update on eMoney:  As you may know – we started a major upgrade to that software at quite possibly the worst possible time, but once we started, we had to finish it.  What does that mean to you?  Logging in to view your accounts on eMoney you might still be experiencing: 

  • Problems logging on
  • Duplicate accounts showing
  • Missing accounts

We are proactively reviewing all accounts daily to resolve these errors.   Please email danielle@heritagefinancialaz.com if you notice these things and we’ll make a note of it.  If you have issues with logging in, she can also help you. 

I know this is a scary time in the market and in our economy.  I’m always here if you need me! 

*First-Trust Economic Report, Time to Fear Coronavirus? 2/25/2020**First-Trust Epidemics and Stock Market Performance since 1980

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