Investing in 401(k)s may be the most popular way many Americans prepare for retirement. When you’re creating your retirement savings and investing strategy, though, there’s more to consider.

Let me backtrack to March and point you toward a post I wrote about asset class diversification. In fact, diversification can extend far beyond your 401(k) plan. To approach your retirement strategy with a big-picture view of diversification, you’ll want to consider additional categories.

(1) Your taxable investments should play a part in your savings strategy. Placing some savings in a standard investment account that you’ve earmarked for retirement means you’ll have access to the money if an emergency comes up prior to retiring.

Unlike investing in a 401(k) plan, which has penalties for withdrawing money before you reach a certain age, taxable investments may not have the same early withdrawal issues. Be careful about making assumptions, though. Some taxable investments may have fees associated with redemptions.

(2) If you’re a homeowner, you’re a real estate investor. You may also have land, rental properties, or a vacation home. Coming off a memorable dip in real estate prices, we can walk away with a lesson: Don’t buy something you don’t want to keep for an extended period of time (10+ years).

The amount of equity you have in a property, or the degree to which you’re under water, should factor into your retirement planning. Think about whether you’ll want to retain real estate investments through your golden years or sell them to fund part of your retirement. Consider the costs of upkeep compared with the alternatives; and remember to factor property taxes into your thinking.

(3) Annuities are probably the most commonly discussed insurance product in most retirement conversations. There are a number of annuity structures, so it’s difficult to make generalizations about them. But, in terms of retirement planning, an annuity can be a good way to provide a guaranteed source of income. Typically, with annuities, fees are high and contracts may be difficult to break—the price paid for guarantees. For that reason, I don’t believe annuities should be your only retirement investment. Rather, they can provide stability alongside other investments. Before purchasing an annuity, make sure it fits within your overall financial plan and consider speaking with a fee-only financial adviser if you have any questions.

(4) Material assets are collectables like vintage cars, artwork, coins, and stamps. Their value is highly unpredictable and determined entirely by demand—not a good description for a retirement investment. I’m not suggesting you diversify your retirement portfolio by purchasing a collectable item.

However, if you’re a collector because you enjoy it and can afford it, you certainly don’t want to forget these items as you’re planning for retirement. If you’re willing to part with them, set a price at which you’ll sell, knowing you may never have the chance to do so.

The bottom line

It’s probably neither necessary nor wise for most people to invest in each and every item discussed above. Pick and choose what works for you since every individual’s situation is unique.

This big-picture style of diversification is designed to protect you against the volatility you could see in life—in the same way asset class diversification protects you from economic volatility.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

In the headlines

A look at some of the market movers from the week:

• Election results in France and Greece roiled markets
• JPMorgan took a $2 billion hit from bad trades
• Bank of America will start offering some homeowners principal forgiveness

• Federal Reserve Chief Ben Bernanke warned of a “fiscal cliff”
• The Facebook IPO is reportedly already oversubscribed
• Ally Financial’s ResCap unit may file for bankruptcy
• Disney’s “The Avengers” smashed the opening-weekend record
• Over the weekend Berkshire Hathaway held its annual shareholder meeting
• Mexican billionaire Carlos Slim is looking to expand further into the U.S. and Europe
• GlaxoSmithKline launched a hostile bid to take over Human Genome Sciences
• Disney earnings looked good despite John Carter flop
• Green Mountain Coffee Roasters’ founder was ousted
• Cisco’s forecast left investors feeling cold
• The FDIC argued that it’s ready to liquidate large financial institutions if necessary

Commentary               

As of the close of trading on Thursday, investors looking for a bounce-back after the dismal performance last week were left disappointed. After the first four days of trading, the S&P 500 had dipped 0.8% after moderate losses on Tuesday and Wednesday. The drop continues the rough start for May. Month to date, the S&P index has shed nearly 3%. The index is, however, still up 8% for the year.

Driving stocks’ slide this week were the reignited investor concerns over the fate of the Eurozone. Elections in France and Greece brought new political forces into the picture that have very different views of the path out of the slump than the countries’ previous heads and the prevailing view in many other Eurozone countries.

In Greece, the political party Syriza placed second in the country’s recent election, making its leader Alexis Tsipras a key player in negotiations to form a coalition government. Tsipras and Syriza are strongly against the austerity measures that the country agreed to in order to receive bailout money. Austerity measures refer generally to a focus on cutting government spending in an effort to cure fiscal deficits.

Evangelos Venizelos, leader of the socialist Pasok group, and Fotis Kouvelis, the head of the Democratic Left party, have said that their views are close and would focus on staying in the euro collective. Kouvelis would, however, look to gradually move the country away from the bailout-imposed austerity measures. But to avoid having to go through another election, the pair would likely have to bring Tsipras to their side. Tsipras has demanded that the country immediately revoke its austerity pledges — a move that most expect would lead to a cancelling of the bailout and a Greek exit from the euro.

Meanwhile, in France, Francois Hollande shocked the world by unseating incumbent Nicolas Sarkozy. Probably most notable among the positions of the incoming Hollande is a distaste for the austerity measures imposed on struggling Eurozone member countries through deal-making championed by his predecessor and Germany’s Angela Merkel. In his campaign, Hollande called for a renegotiation of those agreements with a stronger focus on growth. In TV interviews following the election, Merkel has said that eliminating the imposed fiscal discipline is not up for discussion.

The situation is troublesome for investors from the perspective that it’s creating a significant amount of uncertainty. The probability that Greece remains as part of the euro has once again fallen as the country struggles to form a government and growing forces are pushing back against the austerity measures. Meanwhile, there is a possible butting of heads between the region’s economic giants France and Germany.

There is, however, the possibility of hope within the uncertainty. Many economists and commentators have disagreed with the austerity approach in the Eurozone, arguing that what the struggling member countries need is a focus on growth to help bring their budgets back in order. The fact that most of the struggling economies have only gotten worse lends credence to the idea that another approach may be necessary. Even if the end result isn’t wholesale change and a complete move away from austerity, an incremental move towards growth-oriented policy could benefit the region and, by extension, the rest of the world.

Looking ahead

Europe will be a key focus of the week ahead. Greece is still hoping to form a coalition government and avoid heading to yet another round of elections. Meanwhile, investors and economists will have a keen focus on any interactions between France’s new president and German leadership.

For investors that want to put some focus on the U.S. as well, there will be some key economic indicators to watch next week. Retail sales will be released on Tuesday along with the consumer price index and the Empire State manufacturing report. Wednesday will bring housing starts, industrial production, and the minutes from the most recent Federal Reserve rate-setting meeting. Thursday will, of course, include the weekly read on initial unemployment claims as well as the Philadelphia Fed’s manufacturing report and the leading indicators.

The reports most likely to move the markets are the Philly Fed and Empire State manufacturing reports along with retail sales and the Fed meeting minutes.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

In what may in reality be far more spectacle than important market event, the march towards Facebook’s IPO may overtake a significant amount of the newswires next week. On the bright side, a well-received Facebook IPO could dampen some of the investor worry that has been weighing down stocks in recent weeks.

We follow lots of really good blogs – mostly related to personal finance and economics. The Blog Round-Up allows us to point you in the direction of some great content from the blogging world. Posts* included in today’s round-up are our favorites from the month of April.

What Type of Spender Are You?

from Cash Money Life by Ryan Guina

Some people have a hard time spending money, while it easily slips through the hands of others. Why is this?

There are a lot of reasons, but a lot of it has to do with our internal motivations and attitudes toward money. For example, I find it easier to spend money on other people than I do to spend money on myself – especially if I am spending money on my children. It’s not that I’m scared of spending money or that I have an overly restrictive budget. It’s just that I usually have a bigger long term goal for my money than buying myself the latest and greatest in clothing/gadgets/cars/fill in the blank.

Avoid Money Problems by Planning for Annual and Irregular Expense

From Moolanomy by Kevin Mulligan

Have you ever been caught off guard by an annual expense that you had forgotten would need to be paid this month? Maybe you pay your life insurance with one payment every year or your dog needs to get shots every 6 months. An unexpected annual bill that pops up in a tight financial month can make for a lot of stress and juggling of bill payments. Who gets paid first?

Is Your Spending Normal?

From Get Rich Slowly by JD Roth

Over the past year, one of the most popular features here at Get Rich Slowly has been the monthly “how much do you spend on X?” question. I started these informal and unscientific surveys on a whim. I wanted too see what sort of spending ranges we held as a population of relatively money-savvy citizens.

7 Money Moves to Make When You Get a New Job

From Wisebread by David Ning

Whether you are trying to change positions, find work again after a layoff, or simply start your career, it’s easy to jump for joy when you get a job offer and forget all about your wealth for awhile. Yet, this is a great time to think about your finances, because taking the right steps now can really accelerate your asset accumulation. Here are seven items you should think about if you want to take your wealth to a whole new level.

What I Learned From Buying My First Home

From Money Under 30 by Amber Gilstrab

A few weeks ago, I closed on my first home. (Two months ago, I didn’t even know what closing on a home really meant…that’s how fast this all happened!)

How Much Should You Pay a Babysitter?

From Bargaineering by Miranda Marquit

If you have kids, one of the questions that parents inevitably have to face is this one: How much should I pay the babysitter? If you want to go out and have some fun without the little one(s), and they aren’t old enough to watch after each other, you’ll have to hire someone you trust to watch them while you’re out painting the town red.

The answer to that question, like the answer to so many like it, is that it depends. What you pay depends on a number of factors. You want to be fair to the sitter, but you also don’t want to overpay for the service.

* Blogs we follow and admire sometimes endorse specific investments, general investing strategies or other products/services/ institutions that we do not recommend or have not analyzed. Reviews and endorsements in posts from other blogs represent the views of those bloggers and should not be interpreted as a recommendation/endorsement by Smart401k.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

This post is part of Smart401k CEO Scott Holsopple’s contribution to the U.S. News & World Report Smarter Investor blog series. To view the original article, click here. Original post date April 24, 2012.

If you haven’t already, you may soon notice some investing options from a newer asset class in your 401(k) plan.

Real estate investments are gaining popularity as an employer-sponsored plan offering. So where do they fit into a well-diversified retirement investing strategy?

On the risk continuum, this category falls toward the more aggressive and volatile end because it’s a concentrated, less-diverse asset class. To better understand this idea, think about large-cap stock funds that could be invested across several sectors; a dip in the automotive sector wouldn’t hurt all large-cap stocks. But, since real estate investments are basically all part of the same sector, volatility within the real estate industry would affect a large concentration of real estate investments.

In the quest to diversify a portfolio, real estate investments can be beneficial as a hedge against inflation.  And real estate has traditionally had a low correlation with stock and bond asset classes, which means it doesn’t react to economic changes in the same way stocks do or bonds do. Incidentally, stocks and bonds have historically also had a low correlation with each other. Selecting asset classes with low correlations is beneficial because a dip in one asset class often won’t mean a dip in other asset classes.

Some REITs are publicly traded, but they aren’t required to be. They’re structured similarly to mutual funds in that money is pooled and invested. The Internal Revenue Service requires that REITs invest at least 75 percent of assets in real estate and distribute at least 90 percent of taxable income to shareholders.

Mortgage REITs own mortgages or mortgage-backed securities, and they earn revenue through loan interest. Equity REITs own property and earn revenue through rent. Then there are mixed REITs that have mortgage-based and equity-based investments.

As with mutual funds, REIT managers can practice focused investing—purchasing real estate from a particular geographic region or segment of the real estate market, like warehouses or apartment complexes.

Real estate mutual funds sometimes invest in REITs, but they may also have stock holdings in companies within the real estate industry.

If your employer-sponsored plan has a real estate investing option and you’re trying to decide whether to include real estate in your asset class allocation, you’ll need to do some research. Use your risk tolerance, investing timeline, personal preferences, and the economic climate to determine how aggressive or conservative your allocation should be.

More aggressive investors may want to include real estate as a portion of a diversified 401(k) portfolio, but be certain you’re researching the REIT or mutual fund offered by your plan to ensure it fits with your investing strategy.

A retirement adviser should be able to help you understand the intricacies of real estate funds and/or REITs offered through your employer’s plan to help you decide whether there’s a place in your portfolio for this new asset class.

Photo credit faul

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

A look at some of the market movers from the week:

• Hiring in April fell short of expectations
• Eurozone unemployment rose to 10.9% in March
• Spain’s economic troubles were once again front and center
• The reality of a Facebook IPO draws nearer as the company looks to raise nearly $11 billion

• Microsoft agreed to invest $300 million in a Barnes & Noble subsidiary
• The headaches for Chesapeake Energy continued with the revelation of a $200 million hedge fund run by CEO McClendon
• Groupon shook up its executive leadership in a bid to bolster confidence
• Delta Air Lines is getting into the refining business
• Private equity giant Carlyle hit the public markets, but with limited fanfare
• As the company continues to struggle, Genworth Financial’s CEO stepped down
• Energy Transfer Partners agreed to buy Sunoco for $5.3 billion
• Green Mountain Coffee Roaster shares plunged on disappointing guidance
• The U.S. Treasury announced that it will sell more AIG stock

Commentary               

It was a rough week for investors and it only got worse as the week wore on. Monday started off with a 0.4% loss for the S&P 500 and it was followed on Tuesday by a 0.6% uptick — the week’s only gain. Thursday and Friday plunged the weekly tally deep into the red with respective declines of 0.8% and 1.6%. By the time Friday’s trading had closed, the S&P had lost 2.4%. The drop kicks off May on a bad note and cut the S&P’s year-to-date gain to 8.9%.

Let’s get right to the important stuff here: employment. On Friday, the U.S. Bureau of Labor Statistics and the Department of Labor released April employment numbers. In short, they were not what investors were hoping for.

As it was, the expectation was that 162,000 jobs would be added to the employment roll — which is in the right direction, but not by nearly enough to label it “encouraging.” But when the numbers were released, they were even more disappointing. For the month, total payrolls increased by 115,000 jobs, while private payrolls increased by 130,000. The tally was not only below expectations, but also short of March’s total, adding to a disconcerting trend of slowing employment growth.

And though the average workweek held steady at 34.5 hours, hourly earnings were flat for the month despite an expected 0.2% increase.

What may look like a silver lining is that the unemployment rate dropped from 8.2% in March to 8.1%, but that may actually be more concerning than encouraging. The unemployment rate is based on total employment versus the size of the country’s workforce. The workforce calculation doesn’t take into account people who are not looking for jobs — a group that includes retirees, stay-at-home moms (and dads!), and many college students, for example. However, it also doesn’t include workers that have had such a difficult time finding work that they simply stop looking altogether.

With that distinction in mind, it’s notable that the decline in April’s unemployment rate was driven primarily by workers dropping out of the workforce, not strong job growth. This is worrisome because losing workers has potential long-term implications for the productive capacity of the U.S. economy.

Looking on the brighter side, one potential explanation that makes the lackluster jobs tally a little less worrisome is the consideration of the seasonal adjustments that are made to the data. Employment data is adjusted based on seasonal hiring patters — typically there’s less hiring that goes on during the winter and a bit more during warmer spring and summer months. Because we had a mild winter, that could have pulled some job growth forward and be leading to slower growth now. In other words, the pattern of how jobs were added over, say, the past six months, and the directionality of that hiring trend, may have been thrown off by weather patterns.

In addition, a very real silver lining to the jobs report was that 53,000 more jobs than previously thought were added during February and March. In February, the 240,000 tally was upped to 259,000, while March’s 120,000 increase was increased to 154,000.

As if the U.S.’s employment struggle wasn’t enough to give investors indigestion, the Eurozone debt crisis was once again in focus this week as investors looked past the continued wave of U.S.-company earnings reports. Eurozone unemployment ticked up in March to 10.9%, a level not seen since 1997. The increase was driven by unemployment growth in Spain, Cyprus, Italy, the Netherlands, and Portugal. Spain’s unemployment rate is now at 24.1%, which is above any reading recorded going back to 1986. The country also sunk back into recession during the first quarter.

Looking ahead

After the employment bombshell, the economic calendar will calm down a bit next week. However, investors may want to keep an eye on readings on consumer credit, initial unemployment claims, the producer price index, and the University of Michigan’s sentiment index. Despite the employment disappointment, the unemployment numbers were a bit more encouraging this past week. The 365,000 claims were below expectations and reversed a trend of increasing claims. Economists are expecting next week’s tally to be consistent at 365,000.

So with this past week finishing on a dour note, what can investors look forward to next week to reverse the market’s course? Earnings announcements will continue next week, but it’s unclear whether we can hope for any juice from continued strong reports. Since Alcoa kicked off reporting season on April 10, the S&P 500 index has tacked on a mere 0.8% even as 70% of reporting companies have topped analysts’ estimates. At this point in the reporting season, the market appears to be looking past current-quarter earnings.

There’s more potential downside than upside in the Eurozone situation. Good news will most likely come in the form of a long, slow recovery for the region as opposed to any sudden announcements that would significantly boost the global markets. On the other hand, bad news has been hitting the market in the form of sudden, painful, market-moving developments.

Finally, this may be a long-shot, but a wildcard in this picture could be Facebook. With significant excitement swirling around the company’s massive upcoming IPO, there is the potential that the excitement over that specific company could translate to a more upbeat view on the broader market.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

Over the past few years, I’ve had the opportunity to contribute over 30 articles to the Smart401k blog. I’ve written about general topics, like credit cards and investing 101, and more exotic topics, like stock market superstitions and being a billionaire. As great as it is knowing that I have been able to contribute to the financial education of our readers, I think it’s also important to reflect on the lessons our members have taught me over the years.

Below, in no particular order, are the top lessons-learned from Smart401k members.

It’s Difficult to Stay Focused on the Long-Term

We invest because we want our accounts to grow. Even if we know we won’t be using this money for 20 or 30 years, we still struggle when we see it fall. As adviser’s, we have to keep in mind that investors will experience these emotions, but also make sure that our advice is not emotionally driven. To help calm these fears it’s important to keep both timelines in mind. We choose investments that are appropriate as long-term holdings, but also look for ways to help smooth out the roller coaster ride that we experience in the short-term.  Think of it this way – if you’re anything like me, the pain of seeing an account drop by 25% far exceeds the pleasure of seeing it rise by 25%. This doesn’t mean we will be able to avoid losses from time to time, but we will continue to have a big focus on risk as we build our investment recommendations.

Not everyone is passionate about investing.

While some people live and breathe by what’s happening with the stock market, many more just couldn’t care less. Some people would just like to be told what to do with their retirement plan. And, that’s just fine. Talking with people from all walks of life with varying degrees of interest in investing keeps an adviser sharp.

Sometimes it’s about more than just one person’s retirement.

As our members get closer to retirement, they start to realize the huge benefits they missed out on by not saving aggressively when they first started working. When I have these conversations with our members, they often lead to the individual talking about ways to make sure their kids get off on the right foot. Being able to work with several generations from one family provides a great sense of accomplishment.

There is always more to learn.

Even though I’ve focused my career on financial planning and the financial industry, I’m challenged every day to find out more to meet the needs of our members. Everyday our adviser team is peppered with in-depth questions and topics that Smart401k members want to discuss. These questions can range from the specifics of their investment options to guidance on their overall retirement planning strategy. I know for sure that I am smarter because of the research done to help answer your questions and I know there will be more for me to learn tomorrow with your new questions.

Thank you again to all our members and readers for helping me, and the rest of the team here, grow as advisers. Please do not ever hesitate to let us know about things we can be doing differently to better serve you. While you might think that you are the ones doing all the learning, we wouldn’t be here if it wasn’t for you. Please feel free to contact a member of our adviser team at 877.627.8401 or info@smart401k.com with any questions.

Joe McCulloch

Senior Investment Adviser

Photo credit DannoHung

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

This post is part of Smart401k CEO Scott Holsopple’s contribution to the U.S. News & World Report Smarter Investor blog series. To view the original article, click here. Original post date April 17, 2012.

When you’re staring at your 401(k) investments, how do you decide which funds are best for you?

There isn’t one “right” fund lineup for everyone; anyone who tells you one investing portfolio is right for you and everyone else is making sweeping generalizations. And selecting your investments based on a recent hot streak isn’t a good long-term investing strategy.

There’s a better way to decide which funds will work best for you. It will take work if you’re going it alone, but it will be worth it.

Step One: Begin by selecting the best asset class allocation for your personal situation. Then decide which investments fit into your allocation strategy.

Step Two: Place each fund into an asset class category.You may need to do some research. Fund prospectuses and proprietary websites are a good place to start. Two top sources for fund research are Morningstar.com (www.morningstar.com) and Zephyr Associates, Inc. (www.styleadvisor.com). Major categories include: (1) international funds, (2) large-cap funds, (3) small- and mid-cap funds, (4) bond funds, (5) cash-equivalent funds, and possibly (6) real estate funds.

Step Three: Assess fund quality. You’re not just looking at returns (historical or recent). Here are four criteria for determining quality:

1)   Relative performance: Be sure you’re comparing apples with apples and not with oranges. Compare a fund’s historical and recent performance with those of similar funds from the same asset class. Make comparisons from different time periods, and also note the performance of indexes tracking the asset class during the same timeframe.

2)   Performance consistency: Looking at a fund’s average yearly return. Look at how a fund did during bull markets and bear markets. For retirement investing, it’s preferable to select mutual funds with good performance year after year rather than short bursts of superior performance combined with periods of sub-par returns.

3)   Manager tenure: Performance and returns are more important if they’re associated with a fund manager or management team. A new fund manager at an existing mutual fund might enable continued consistency—or maybe not. Have you ever been to a restaurant under new management? Sometimes it’s the same. Sometimes it’s different but still good. Sometimes it’s improved . . . and sometimes it’s worse.

4)   Risk measures: Risk-based criteria help evaluate how funds perform, given the risks each fund takes. For example, assume fund A has historically produced greater performance during periods of market gains compared with fund B, but the performance has been at the expense of big risks. You can find risk-related statistics on many financial websites—or you can call the fund company.

Step Three: Research fund fees. If you’re examining net returns, fees are already factored into the research you’ve done. However, everything you’re researching is in the past. Since you want to choose the best fund for the future, lower fees are preferable when other fund characteristics are relatively equal.

Step Four: Determine asset size. When mutual funds grow past a certain point, in terms of assets under management, it generally becomes more difficult for fund managers to stay true to the funds’ investing philosophies. Where is that “certain point”? There isn’t one answer, but many funds close to new investors when managers believe they’ve reached it. But some funds don’t ever close. They’re industry behemoths that may be very successful but lack the agility to maneuver quickly in a changing market; and fund managers find it more difficult to purchase some investments that may be integral to a fund’s philosophy. The effect of asset size depends heavily on asset class, so judge size relative to other funds in the same category, with a preference for funds that have more manageable levels.

Once you’ve selected the best funds from each asset class, you can follow your allocation strategy to decide what percentage of your investable dollars should go toward each fund. It takes some work to create a good portfolio just for your needs. Don’t get discouraged. If you need help, look for a fee-only adviser to guide you toward the best investments for you.

Photo credit KenTeegardin

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

A look at some of the market movers from the week:

• First-quarter U.S. GDP growth was slower than expected
• The Apple freight train kept on rolling after a big earnings beat
• Wal-Mart shares suffered after a report that the company had covered up bribery in Mexico
• The Federal Reserve kept its key interest rate stable and signaled that additional stimulus is unlikely

• U.K. first quarter GDP fell 0.2%, signaling a double-dip recession for the region
• Spain’s economy contracted by 0.4% in the first quarter
• Standard & Poor’s cut Spain’s debt rating to BBB+
• Chrysler posted its best quarter since its 2009 bankruptcy
• Sales of e-readers helped boost Amazon.com’s quarterly results
• Starbucks’ earnings topped estimates but Europe challenged the company
• Netflix shares plunged after a muted outlook
• Nestle agreed to buy Pfizer’s baby-food unit for $11.9 billion
• AstraZeneca’s CEO unexpectedly stepped down
• Watson Pharmaceuticals agreed to buy Actavis Group for $5.6 billion
• Standard & Poor’s cut Nokia’s credit rating to junk
• Eli Lilly’s quarterly earnings topped expectations
• Siemens cut its full-year outlook on charges from offshore wind-power projects
• H&R Block announced an internal shakeup in hopes of cutting costs

Commentary               

The past week started out on a bad note, with the S&P 500 falling 0.8% on Monday, but it was all uphill from there. Each of the other four trading days finished in the black, including a 1.4% jump on Wednesday. By the time the exchanges closed on Friday, the S&P had tacked on 1.8% for the week, building on gains from the prior week and continuing to battle back from losses earlier in the month. With one more trading day in April, the month has thus far shaved 0.4% off of the S&P index, but year to date the index is up 11.6%.

Monday’s drop came as investors once again started fretting about the Eurozone and the member countries’ continued debt struggles. Data showed that debt levels continue to rise over the entire region despite spending cuts. Additionally, many in the currency bloc worried that French presidential challenger Francois Hollande may pose a real risk to incumbent Nicolas Sarkozy. There are concerns that a change in France’s leadership could upend the efforts to get the euro region’s fiscal house back in order.

Shares of Wal-Mart also plunged on Monday after a report by The New York Times revealed a cover-up of bribery in Mexico by the company’s subsidiary there. As a huge company, Wal-Mart exerts a significant pull on the major indexes, so its drop alone was a notable factor in Monday’s declines.

The market reversed course on Tuesday though, and Tuesday’s modest gain was built on significantly on Wednesday. In the same way that Wal-Mart provided an early-week drag on the market, Apple provided a mid-week boost. The iPhone and iPad maker surged after significantly beating analysts’ earnings estimates for its fiscal second quarter. The market also got a push from The Federal Reserve as it held its key interest rate steady and upwardly revised its economic growth forecast for 2012, to a range of 2.4% to 2.9%.

U.S. markets coasted through the final two days of the week, managing to tack on nearly another 1% even as U.S. GDP growth was notably short of economists’ estimates. The latter news came on Friday when the U.S. Bureau of Economic Analysis released its “advance” reading on first-quarter GDP growth, which showed the key economic indicator advancing at a 2.2% rate, notably slower than the 2.5% rate that was expected. A selloff reaction to the news was likely avoided because consumer spending growth — which drives a significant portion of the economy — was stronger than expected while a primary drag on growth was from government spending.

Earnings announcements continued to provide a significant tailwind for the market through the week, even through some disappointments on the economic front. Apple was a significant upside earnings surprise, but it was joined by a host of other major companies including Amazon.com, Chevron, Ford, PepsiCo, Dow Chemical, Boeing, Caterpillar, Merck, and Raytheon. While companies posting better-than-expected earnings far outnumbered the laggards, there were a few notable disappointments including Waste Management, ExxonMobil, and Aetna.

At this point in the earnings season, roughly 300 of the S&P 500 companies have reported earnings, with around 70% of them topping earnings estimates.

Looking ahead

Earnings will continue to flood the market next week and there will be plenty of very significant announcements for investors to keep their eyes on. However, at this point in the earnings-release schedule, the question starts to become how much additional impact earnings results can have on the broad indexes. Stronger-than-expected earnings have already gone a long way towards reversing a lackluster start to April, but if investors start to see those strong results as fully reflected in the indexes, then further strong earnings may not have as much of an impact.

What is sure to swing markets in one direction or another next week though, is data on employment. With April wrapping up on Monday, we’ll see both private-payroll company ADP as well as the U.S. government release numbers on jobs in the coming week. ADP will offer its take on Wednesday, while the Bureau of Labor Statistics will follow on Friday. Current estimates show ADP reporting 170,000 payroll additions and the BLS showing 162,000 new jobs. Market watchers will also want to keep an eye on any revisions that the BLS applies to past data, as that can significantly increase (or decrease) past job gains.

With a painful downgrade for Spain this past week and French elections rapidly approaching, the Eurozone could also play a significant role in next week’s market movements. Unfortunately, with no quick fixes for that quagmire, the news from that part of the world is more likely to be a drag for markets.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

With the end of April quickly approaching, many of you have already taken part in your own version of spring cleaning. Whether it’s finally reorganizing that garage, getting the yard work done or just freshening up the house, this time of year represents a time of rejuvenation and fresh beginnings. What better time than now to discuss the often-overlooked importance of cleaning and reorganizing your 401(k) investments?

The investments you pick and the amount you invest in each depends greatly on you as an individual – specifically, your risk tolerance and personal goals for retirement. Once you’ve established the appropriate mix of investments for your nest egg, it may seem fine to just kick back and sail away toward retirement. Taking the sailing analogy one step further, winds will always shift from time to time, which may either speed you up or slow you down. It’s important to adjust your course regularly in order to stay on a steady path toward your destination.

These are all points you hear us stress again and again, but one topic that is vital to your investment success and may sometimes be forgotten is rebalancing. While you may do a great job of adjusting the amount you contribute to each fund in your portfolio a few times every year, it’s also important to make sure that the overall look and feel of your total group of investments hasn’t gotten off course.

Some investments, like stocks, may grow faster than other investments. This means that in a period of strong performance, a portion of your overall portfolio may grow, while your other investments may become smaller pieces of the pie. Because this moves you away from your intended strategy, you’ll want to rebalance.

Making sure to rebalance your investments at least 2-4 times per year will help keep you on a consistent path and ensure that your long-term strategy stays intact.

Want to learn more about asset allocation in your investment portfolio? Give our podcast a listen or check out additional info in our education center.

Andrew Thomas

Smart401k Associate Representative

Photo credit robertnelson

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

This post is part of Smart401k CEO Scott Holsopple’s contribution to the U.S. News & World Report Smarter Investor blog series. To view the original article, click here. Original post date April 10, 2012.

You’ve heard of fight or flight, and I know you felt the urge to do one or the other the last time you were truly afraid. But falling victim to this instinct with 401(k) investing could carry long-term consequences.

It’s an instinct carried forward through thousands of years of dangerous living. The idea is that humans, when presented with hazard, will choose to fight or run away. Deciding whether to battle or flee is partly determined by the situation, and it’s partly a function of individual personality.

However, our ancestors didn’t have many intellectual fears—situations that caused fear even though there wasn’t a physical risk. In our modern world, we face the intellectual fear of losing money. So even though market drops don’t place our bodies in harm’s way, we still experience a fight-or-flight urge when our investment holdings take a dip.

When the market loses stability, an investor feeling the instinct to fight may become uncharacteristically aggressive. This fighter could jump into the best-performing funds from the past few weeks or months, giving into the recency bias and not heeding the long-term outlook for the investments. Or he may pour money into a single asset class and ignore the benefits of diversification.

Investors who feel the urge to fight should remember that moving 401(k) plan money to follow returns and/or concentrating on one asset class in an effort to beat a slump is a risky proposition. If anything goes wrong with a fight-based maneuver, losses could be colossal.

Conversely, some investors’ instincts shout “cut and run” when the market gets wobbly. The flight crowd is the first to jump to cash when the market loses ground. They run from investing. Then they wait to re-enter the market after it has rebounded. There’s a fundamental problem with this behavior: These investors potentially sold investments at a low point then bought investments at a high point; they’ve set themselves up to lose money in the long term because they’ve escaped benefiting from the gains inherent to a market recovery.

For new investors, the flight instinct may cause them to miss out on the benefits of compounding. For investors nearing retirement, it may put their nest eggs at risk of being corrupted by inflation.

Experiencing a significant market drop or a full-on recession can have a lasting effect on many investors. People feel regretful for poor decisions—or just for holding steady. The grass is always greener on the other side, and many investors feel they should have done something differently to avoid losses. Further, a greater loss begets more regret, which continues to affect investing decisions for years or decades to come. Leftover fear can trigger more fight-or-flight behavior.

Retirement investors benefit from developing a long-term savings and investing strategy, in part because they can ignore fight-or-flight and stick to that pre-determined plan.

It is comforting to have rational research behind your decisions when you’re trying to resist instincts and gut feelings. With a plan in place, you’ll have a roadmap when times are tough and your instincts are telling you to fight or flee. Sticking to a strategy can help lessen your fears and calm your instincts.

Create your long-term retirement strategy as soon as possible, if you don’t already have one. Then reassess your situation and goals once per year to update your strategy as needed. With a plan and a routine, you put yourself in a better position to make good decisions.

If you’re uncomfortable creating a retirement strategy on your own, a retirement adviser should be able to help you establish a plan based on your individual finances, familial situation, risk tolerance, and personal biases. You can then work with your adviser to make rational adjustments as your situation changes and/or the economic climate evolves.

Photo credit PeterJBellis

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Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

A look at some of the market movers from the week:

• Intel topped earnings expectations, but failed to excite investors
• Microsoft surprised investors with better-than-expected results
• IBM’s earnings topped estimates, but revenue fell short
• Yahoo’s business showed signs of life

• eBay’s first quarter results got investors fired up
• Bank of America’s earnings topped estimates
• Spain was able to raise money, but bond yields rose
• Warren Buffett told investors that he has stage 1 prostate cancer
• Goldman Sachs sold $2.3 billion worth of ICBC shares to Temasek
• Object and Stratasys agreed to merge in a $1.4 billion deal
• The Supreme Court heard arguments over whether pharma reps should get overtime pay
• The “Buffett Rule” was blocked by the U.S. Senate
• A Reuters’ report revealed that Chesapeake Energy’s CEO took out $1.1 billion in loans to fund asset purchases

Commentary               

Your trusted market watcher will be traveling starting on Friday, so this week’s report was prepared as of the end of trading on Thursday.

Through Thursday’s close, the market had taken a tepid step towards reversing a couple weeks of losses. The S&P 500 index had tacked on 0.5% by the end of Thursday’s regular trading, though three of the first four trading days of the week had ended in losses. The one up day, however, was a big 1.5% rally on Tuesday. Through the 19th, April had shaved 2.2% from the year’s tally, but the S&P was still up 9.5%.

Much of the week was, indeed, about first-quarter earnings. However, even a particularly strong start to the earnings reporting season couldn’t quite overcome some disappointments on the economic front and put investors back in a bullish mindset.

On the earnings front, tech companies played a leading role in the strong start to first-quarter earnings. The positive results were broad based, extending from the chip makers like Intel, AMD, and Qualcomm, to hardware from Seagate and EMC and software and services from Microsoft, eBay, IBM, and Yahoo. To some extent, the results in the tech sector may point to life in consumer spending, but the pull from businesses on tech giants like IBM, Microsoft, and EMC, may go further to point to strength in corporate spending.

Also putting a good foot forward early in the season was the finance and banking industry. The laundry list of financials that topped estimates included Travelers, Bank of America, Fifth Third Bancorp, Keycorp, BB&T, American Express, and Goldman Sachs. Working in the sector’s favor is the fact that many analysts still have a tepid view on the industry, so the hurdles they set may still be easy to jump. Additionally, many of the banks still have significant loss-reserve cushions set aside from the recession that they can now reduce as loss expectations fall.

Industrial and healthcare companies were also chiming in with analyst-topping numbers as well. On the industrial side, Union Pacific, Textron, and CSX all topped estimates. Railroads Union Pacific and CSX are particularly notable as the transportation companies can be leading indicators for increasing economic activity. On the healthcare side, Lab Corp, UnitedHealth, Abbott Labs, Intuitive Surgical, Baxter, and Johnson & Johnson all topped expectations as well.

There were, in fact, some companies that did manage to miss earnings views, but they were few and far between. Early in the week, Citigroup raised eyebrows as it missed estimates, while Mattel slumped as orders from large customers slowed. Nokia, meanwhile, missed expectations in a continuation of an extended slump.

The positive earnings reports played an integral part in the market’s gains on Tuesday, but were unable to provide a broader spark as economic news created some significant headwinds. On Monday, retail sales surprised to the upside, growing 0.8% in March, which was much better than the 0.3% growth expected by economists. Industrial and manufacturing reports, however, disappointed across the board. The Empire State manufacturing index came in at 6.6, below the estimate of 17.5; industrial production stayed flat in March despite the expectation for growth of 0.2%; and the Philadelphia Fed’s manufacturing survey for April provided a reading of 8.5, below the 10.3 that was estimated.

Building on the concerns over employment, initial unemployment claims were again higher than expected, coming in at 386,000, down from 388,000 last week, but above the expected 375,000. Providing some balance to the downside reports were business inventories and the leading indicators report, both of which were better than anticipated.

Looking ahead

The coming week will likely be another dominated by earnings news. However, investors will want to keep a close eye on a couple of key economic events. The most important will come on Friday as the U.S. Bureau of Economic Analysis releases an advanced reading on first-quarter GDP. The mid-week rate decision from The Federal Reserve may also be worth tuning in for. As with most of the recent iterations of the Fed’s rate decision, the rate itself won’t be of much note — it will stay at a range of 0% to 0.25% will almost 100% certainty — however, with some headwinds seen on the employment front, market watchers will be looking closely at what the Fed has to say when it releases the decision.

As noted though, most of the week’s news will likely be focused on U.S. corporate earnings. In the front end of the week, major reports will include ConocoPhillips, Hasbro, Netflix, 3M, Aflac, Apple, AT&T, Coach, Illinois Tool Works, Norfolk Southern, Hershey, United States Steel, and United Technologies. Wednesday will feature Boeing, Caterpillar, Delta Air Lines, Dr. Pepper Snapple, Eli Lilly, Glaxosmithkline, Harley-Davidson, Southern Co, Sprint Nextel, US Airways, and WellPoint.

Finally, the back end of the week will include reports from Amazon.com, Colgate-Palmolive, Dow Chemical, ExxonMobil, Kellogg, Lockheed Martin, PepsiCo, Raytheon, Starbucks, UPS, Waste Management, Chevron, Merck, and Procter & Gamble.

What may be particularly notable is the commentary from industrial and transportation companies such as Caterpillar, United Technologies, UPS, Waste Management, Illinois Tool Works, and Dow Chemical. These companies are at the front end of the economy and if the business climate is shifting gears, they may see it before companies like Starbucks or Harley-Davidson that are further down the line.

While there will be plenty for investors to watch next week, the GDP report on Friday is what will likely make or break the week. No matter how much positive momentum earnings season brings, a poor result from that release would almost certainly derail a positive week for the market. The impact could stretch into the following week as well, though by that point investors will have shifted their focus to the month-end employment numbers.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

Even someone who writes about finances and the financial industry can admit that reading about finances can be a little boring at times. But luckily there is a relatively new “medium” that can help make reading about finance a little more digestible and enjoyable, it is the infographic. Infographics are simply data visualizations that present complex information quickly and clearly.

To get started, we have assembled five infographics* that do a great job of breaking down common retirement questions, terms and ideas.

What Is a 401(k) Plan?

Courtesy of the Mint Life blog, this infographic gives the history of the 401(k) and also provides a look at the mechanics behind a 401(k).

Keep Your Nest Egg Intact with 401k Rollover

401kRollover.com provides a great breakdown of the different options available when rolling over your 401(k), including tips and stats to help you understand the process.

How Much Do You Need to Retire?

This infographic from MoneyNing compares a traditional 401(k) to the Roth 401(k) option while examining how much money you may need during retirement.

The Way We Retire Now

From Ally Bank, this infographic examines current trends in retirement planning and examines the growth of IRAs in retirement plans.

Not Ready For Retirement

Mercer offers up a comparison of U.S. retirement with other countries across the globe.

Do you have any infographics you refer to for retirement or financial planning? Let us know in the comment section or on our Facebook page.

Despite the great variety of informational mediums available to you, questions can still arise as you plan for your financial future. If you have any questions don’t hesitate to get in touch with your advising team at info@smart401k.com or 877.627.8401.

Evan Davis

Marketing Associate

* Blogs we follow and admire sometimes endorse specific investments, general investing strategies or other products/services/ institutions that we do not recommend or have not analyzed. Reviews and endorsements in posts from other blogs represent the views of those bloggers and should not be interpreted as a recommendation/endorsement by Smart401k.

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

This post is part of Smart401k CEO Scott Holsopple’s contribution to the U.S. News & World Report Smarter Investor blog series. To view the original article, click here. Original post date March 27, 2012.

Employees are transient. Look at your own life: Even if you’re in your 20s or early 30s, it’s possible you’ve already worked with several different employers. One report from the Bureau of Labor Statistics stated that the boomer group studied held an average of 11 jobs while they were between the ages of 18 and 44.

In the process of all of these job changes, though, we’re leaving behind lots of 401(k) investments.

Each employer-sponsored plan has different rules, but former employees can generally leave sums exceeding $5,000 in a 401(k)-like plan when they move to new job opportunities. People with several former employers may have several employer-sponsored retirement plan accounts. Even if you’re not contributing to an old account, the vested money is still yours.

Over time, and after a few employment changes, details may run together. It becomes harder to keep track of each retirement account you own.

Create a simple system to track every individual account. Save everything you receive for each account. If you have e-mailed statements, create a unique email folder on a personal—not professional—e-mail account for each retirement account.

Check with each plan to ensure you have current contact information and account details and to make sure they have current contact information on you. It will be easier to find your money if you don’t wait years to track it down.

If you’re reading this and wishing you’d started keeping track of your retirement money earlier, you’re not alone and all is not lost. Former employers are legally required to protect your plan dollars. Just remember that acting sooner is easier.

Begin by calling your former employers. Explain your situation, and you should be directed to someone who can help. However, you may have difficulty finding former employers. Some may not even exist anymore.

The Pension Benefit Guaranty Corporation is a government entity that ensures pensions and manages some pensions for employers that no longer exist. They have resources to help people find pension money they’re owed.

Separately, the Pension Rights Center helps individuals find lost pensions and 401(k)-like plans and dispute payments. In addition, the Department of Labor has an Abandoned Plan search function.

The easiest way to keep track of your retirement money is to minimize the number of accounts you have.

In many cases, you can roll your old 401(k) to your new employer’s 401(k) or to an IRA. If you’ve left several employers, you can probably roll the funds from several employer-sponsored plans into one IRA.

Prior to leaving an employer, it’s helpful to figure out the rules and time frames that govern your 401(k) investments. While you may be allowed to leave money there, some plans require that you move smaller dollar amounts; and they’ll cash out your funds if you don’t roll your savings to another qualified account like an IRA or your new employer’s plan.

Remember to gather and keep the documentation regarding your retirement plan when you leave your employer. You may not be ready to make a decision about those funds at the moment, but you’ll want access to information when you are.

 Photo Credit D’Arcy Norman

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Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

A look at some of the market movers from the week:

• A powerful earthquake hit Indonesia
• Alcoa’s kicked off earnings season with an estimate-topping profit
• Chinese GDP growth lagged estimates for the first quarter
• JPMorgan earnings beat expectations

• As did Wells Fargo’s earnings
• There was low demand for German bonds offered at record low yields
• Weekly jobless claims were higher than expected
• Inflation may be eroding consumer spending power
• Best Buy CEO Brian Dunn abruptly resigned over conduct issues
• Avon Products hired former Johnson & Johnson executive Sherilyn McCoy as its new CEO
• Microsoft paid $1 billion for roughly 800 patents from AOL
• Sony announced 10,000 job cuts in a turnaround effort
• Facebook agreed to buy Instagram for $1 billion
• Chesapeake Energy raised $2.6 billion through asset sales
• Las Vegas Sands’ CEO Sheldon Adelson is eying a $35 billion investment in Spain
• Apple is fighting allegations of price fixing in the ebook market
• Nokia continues to struggle to get out of the red

Commentary               

The ugly week on Wall Street brought on a few negative superlatives as the S&P 500 index had both its worst week of 2012 and its worst single day. After a 1.1% drop on Monday, Tuesday became the fifth straight day of losses for the index as it slipped 1.7%. Though the market recovered some ground on Wednesday and Thursday, Friday closed the week with another 1.2% loss, leading to a 2% drop on the week. Month to date, April has now shaved 2.7% from the S&P, though the index is still up 9% on the year.

Media reports on Tuesday suggested that global markets were falling on renewed concerns over the European debt situation. To be sure, yields on Italian and Spanish debt were climbing, but the market seemed to have built up its own downward momentum and was falling in large part thanks to the fact that, well, it had been falling. By Tuesday, headlines were worrying about the market “plunge” and no doubt helping goad on the sell-off.

The streak was broken on Wednesday thanks in large part to the after-hours earnings report from Alcoa that topped analysts’ estimates. The aluminum giant’s earnings announcement is generally regarded as the start to earnings season and its Wall Street-topping performance appeared to break the pessimistic streak on the markets. As the week went on, Alcoa was joined by JPMorgan, Wells Fargo, and Google in reporting better-than-expected earnings.

While investors’ focus is likely to shift further to earnings reports as the season ramps up in the next few weeks, investors do indeed have a reason to be somewhat concerned about the state of the global economic recovery. The situation in Europe is unlikely to resolve quickly, so the poor fiscal state of countries like Italy and Spain could be an overhang for the market for a while. Of course even as those countries seem stuck in the mud, Germany continues to power forward. Though news reports highlighted weak demand for German bonds this week, the country was offering those bonds at record low levels, which underscores the market’s faith in that economy.

China, meanwhile, has been a big contributor to global growth and a bit of a prop for the staggering developed economies in the Western world. That Asian giant has, however, been facing tougher headwinds lately as growth is slowing while inflation pressures stubbornly persist.

Looking back to the U.S. there’s a bit of a mixed picture. This week’s economic reports had their low points — unemployment claims were higher than expected and the University of Michigan’s consumer sentiment gauge fell from its previous reading — but there were continued signs of progress. Wholesale inventories expanded by 0.9% in February, above the 0.5% expectation and consumer price increases were right in line with estimates. Notably, the Federal Reserve’s Beige Book report said that overall “the economy continued to expand at a modest to moderate pace” while it noted that one region, Minneapolis, actually grew at a “solid pace.”

In all, there really wasn’t much during the week that should have particularly surprised investors. The key takeaway — thanks to the 2% drop in the S&P 500 — is probably that investors are still very skittish and may be starting to brace themselves for a correction after a torrid run through the first quarter of the year.

Looking ahead

Investors will probably want to keep an eye on a few economic reports next week including retail sales, Empire State manufacturing, industrial production, and the Philadelphia Fed’s manufacturing report as they trickle out through the week. However, the key theme next week will almost certainly be U.S.-company earnings reports.

On Monday we’ll get reports from Citigroup, Mattel, and Charles Schwab. Tuesday will follow with Goldman Sachs, Intel, Johnson & Johnson, Seagate, Stryker, U.S. Bancorp, and Yahoo. On Wednesday, the major reports will include Abbott Labs, Bank of New York Mellon, BlackRock, Dover, eBay, Halliburton, Textron, and Yum! Brands. Thursday’s reports will include AMD, Bank of America, BB&T, Capital One, Chipotle, Danaher, EMC, E*Trade, Microsoft, Morgan Stanley, Union Pacific, Unitedhealth, and Verizon. Finally, on Friday General Electric, Honeywell, Ingersoll Rand, Kimberly-Clark, McDonalds, Schlumberger, and Under Armour are all slated to report.

Will the market manage to reverse the losses of the past week during the week ahead? A lot of that will fall on the results of the laundry list of earnings announcements listed above. If corporate profits look strong — and particularly if they are stronger than Wall Street had been anticipating — then the pessimism that tripped up investors last week

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About Smart401k

Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.

Credit cards, student loans, car payments, personal loans, and mortgages, are but a few contributors to what can become a crushing debt burden.  In a rush to alleviate the burden and get your head above water it can be easy to lose sight of the bigger picture.

Sure, nobody wants to find themselves under the weight of overwhelming debt.  But if you do, it does not mean your financial plan should focus on nothing else.  It’s tempting to pour all your energy and resources into eliminating debt.  Much satisfaction can be derived from the systematic whittling down of your outstanding balances each month.

Don’t forget, you still want to retire someday.  Also, once you’re out from under this debt you want to make sure to avoid the things that got you there in the first place.

What type of debt are you dealing with and what are the interest rates being charged?  Credit cards are notorious for high interest rates.  So all of your resources should go toward paying these off as quickly as possible right?  Not necessarily.

Unfortunately, life doesn’t stop just because you are focused on paying off your debt.  It’s a good idea to establish a rainy day fund so you don’t find yourself swiping that card to pay for the unforeseen car repairs or other sudden cash needs.  As you climb out of the “debt hole” it’s important to make sure you don’t slip and fall further down.

Your long term goals are important too.  Some would argue that high interest debt should be eliminated even before focusing on retirement savings goals.  After all, look how high that interest rate is, an investor would have to earn an even greater return on their investments to justify saving over paying off the debt first.

Well, what about your work retirement plan?  Some employers offer a generous matching contribution to their participants.  This matching contribution can provide an outstanding return on an investment in your own future.  Depending on the employer’s contribution and your own contribution this could amount to a 25%, 50%, or even 100% boost in your return, which is too good to pass up.

So, what should you do when digging out of your “debt hole?”

• Establish an emergency fund to cover unexpected expenses
• Remember your longer term goals.  Take advantage of the employer match.
• Explore options to reduce rates on high interest debt.  You may be able to negotiate a payment plan at a lower rate or transfer the balance.  With certain loans, it might be beneficial to refinance if eligible for a lower rate.  Focus on the highest rates first.

It never hurts to contact your debtors and explain your situation; you may be surprised by their flexibility if you simply ask.  The important thing is to avoid tunnel vision when it comes getting out of debt.  Your debt repayment plan is simply one piece of a sound personal financial plan.

Randy Schaller

Investment Adviser

Photo credit Images_of_Money

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Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.