The CARA Group 401k Enrollment/Educational Meeting

Transcription

1 The CARA Group 401k Enrollment/Educational Meeting Presented By: Horace Seely-Brown JLTD Advisors, LLC September,

2 Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Figures are past results and are not predictive of future results. Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from JLTD Advisors, of the CPI website and should be read carefully before investing. 2

3 Interested parties Advisor- JLTD Advisors, LLC Administrator/Record-keeper- CPI-Qualified Plan Consultants Money Management- American Funds, Lord Abbett, Franklin Templeton, etc. 3

4 JLTD Advisors, LLC Privately held company, with a fiduciary role to put its clients interests above everything else. We have been advising clients about retirement for 15 years. Team approach with experience drawn upon from the big investment firms to small independent shops with an entrepreneurial spirit. 4

5 CPI- Qualified Plan Consultants More than $14 billion in assets Over 8700 small-mid size business plans with more than 490,000 plan participants A leader in the retirement plan industry 5

6 Money management Institutionally priced and managed mutual funds Open architecture providing for a best in class fund lineup. American Funds, Lord Abbett, Franklin Templeton,etc. 6

7 Discussion points Why should I save for retirement? Why invest in a 401k plan vs an IRA? How should I invest my contributions? How do I access my accounts/change contributions/investment options? Sound investment strategies 7

8 Why saving for retirement is more important than ever! People are living longer A 65 year old couple has a 50% chance that one spouse will live to age 90 Social Security will provide less % of needed retirement income. It is estimated that Social Security may only provide for 40% of expected retirement costs Social Security Administration

9 Why saving for retirement is more important than ever! HealthCare Costs It is estimated a 65 year old woman retiring in 2010 would need at least $143,000 in savings to have a 90% chance of having enough money to cover health insurance premiums and out-of-pocket costs in retirement. Employee Benefits Research Institute Market Shocks Peace of Mind 9

10 Why invest in 401k Plan vs an IRA 401k Plan IRA Contribution Limits $17,500 $5,500 Catch-up Contributions (over age 50) $5,500 $1,000 Deductibility Typically yes, however plan must pass testing Generally yes, however income testing Loan Provisions Dependent on plan no Cost Size of plan may help lower participant cost Dependent on size of account 10

11 Where to Invest? Choose a ready-made portfolio Build your own portfolio 11

12 Target Date Funds The CARA Plan offers 3 funds with unique investment goals/timeframes in mind. These portfolios are professionally managed and rebalanced according to 80+ years of investment experience. Determine your expected retirement date and choose the corresponding fund. 12

13 Build your own portfolio Select from the list of investment options outlined on the website. You can change your allocation at any time to fit your specific time horizon, risk tolerance and individual goals. 13

14 How do I view my account/make changes? Visit the website at Any changes made after 3pm Central time will become effective the following business day. Call the participant hotline at

15 Strategies for Sound Investing Buy and Hold Regular Investing Diversification 15

16 What s your perspective? Focus on the long term, not the bumps along the way 15% Historical short-term bumps $8,000 6,000 4,000 2,000 Historical long-term growth Short-term bumps shown by the unmanaged Standard & Poor s 500 Index and reflected in monthly return percentages from 1/1/93 through 12/31/12. Long-term growth represented by a hypothetical $1,000 initial investment in the same index from 12/31/92 to 12/31/12. The index is unmanaged and, therefore, has no expenses.

17 The power of compounding $200 per month invested in the S&P 500, 1/1/93 12/31/12 Investment Earnings $24,000 invested $48,000 invested $12,000 invested 78% 22% 51% 49% 54% 46% 5 years $22, years $30, years $93,897 Source: Thomson. Results based on Standard & Poor s 500 Index, with dividends reinvested. Cumulative earnings equals year-end account value less cumulative investment.

18 Regular Investing Also known as dollar cost averaging Gradual approach Involves investing a fixed amount on a regular schedule 18

19 Benefits of Regular Investing Encourages discipline Offers a systematic approach Keeps you investing through down markets Eases anxiety about daily market fluctuations 19

20 Diversification: the risk-return relationship Average annual total returns, 12/31/82 12/31/12 Return 12% 11 40% stocks / 60% bonds 80% stocks / 20% bonds 100% stocks 20% stocks / 80% bonds % bonds % Volatility risk Sources: Stocks Standard & Poor s 500 Index; bonds Ibbotson Long-Term Corporate Bonds Index. Data from Ibbotson Associates. Indexes are unmanaged. Volatility risk calculated using standard deviation (based on monthly returns), a measure of how returns over time have varied from the mean; a lower number signifies lower volatility.

21 The advantage of staying the course Growth of a hypothetical $100,000 investment (12/31/92 12/31/12) $484,696 $342,052 $229,891 $121,537 Average equity investor S&P 500 Index Average fixed-income investor Barclays U.S. Aggregate Index Source: Average equity and fixed-income investors Dalbar. Dalbar uses data from the Investment Company Institute, Standard & Poor s and Barclays index products to compare mutual fund investor behavior with an appropriate set of benchmarks. These behaviors are then used to simulate the average investor. Ending values for hypothetical equity and fixed-income investor investments are based on average annual total returns. The indexes are unmanaged and, therefore, have no expenses.

22 Investing in an uncertain market Set Realistic Expectations Stick to sound investment strategies Customize your portfolio to suit your investment objective Invest for the Long Term and Stay the Course 22