Tech CU Money Savvy

Is my money safe in my 401(k)?

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Tue, 07 Oct 2008 22:26:12 +0000

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If you’re worried about the money you’ve invested in your 401(k) plan, don’t be. It hasn’t been talked about much in the media, but in September the US Treasury Department announced that it would guarantee money invested in money market funds before September 19 if those funds are unable to maintain a $1.00 net asset value (”break the buck”). That means, if you put in a dollar into your 401(k), the US Treasury is guaranteeing that you get a dollar back. Eligible funds include both taxable and tax-exempt money market funds deposited.

There are some exceptions, and while the program protects the accounts of investors, each money market fund makes the decision to sign-up for the program. Contact your money market fund manager or human resources person to find out if your fund has signed up for the Treasury’s Temporary Guarantee Program for Money Market Fund.

If you’d like to read more about the program, check out the following links:

Treasury Opens Money Market Funds Guarantee Program

FAQ: Treasury’s Money Market Fund Guarantee

So what if the company you work for, or the company that manages your 401(k), goes out of business? Is your 401(k) is safe?

By law, 401(k) assets are held in trust so it’s never counted as part of a company’s assets. The only thing your 401(k) is vulnerable to is investment loss. (Just an FYI: If you have money in your 401(k) in your company’s stock, and the company goes bankrupt, you do lose that money. This is another reason for diversification.)

If you’re concerned about the diversification of your fund, pull out your most recent 401(k) statement or ask someone in your human resources department for an update to make sure your savings are spread across more than one type of investment.

Even as the market is going through its fits and starts, many experts are saying that you should keep contributing to your 401(k). First, the company match you receive helps to cushion any losses in the short term. If you invest $1 and your company matches 50 percent, then you have a $0.50 that did not come directly from your pocket. Also, your savings are tax-deferred so you have more money working for you. When you cash out, you get tagged with a 10 percent early withdrawal fee and federal and state income taxes, which can eat into as much as 40 percent of your initial investment.

More importantly though, when thinking about saving for your retirement it’s never a good idea to try and “time” or “play the market,” but rather, you should be consistently contributing to your fund over a long period of time. Mellody Hobson, a Good Morning America financial contributor, tells us why:

It is never a good idea to sit on the sidelines when it comes to saving for retirement. As I have said time and time again, it is absolutely impossible to time the market. There have been a number of studies that have shown that the negatives of missing just a handful of the best days of the market far outweigh the benefits of missing the worst days, and we all know there is no way to predict with 100 percent certainty the good and bad days of the market.

Again, one of my favorite sayings is that bull markets always follow bears. After the last bear market, stocks zoomed up almost 33 percent just one year later. You do not want to miss out on this rebound!

Read more on what Mellody says are the “Five Must-Knows About Your 401k Fund” by clicking here.

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Be Green, Save Money: Catch a Ride on Public Transport!

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Fri, 03 Oct 2008 19:48:20 +0000

Perhaps like many of us in this new fuel-conscious era, you’ve considered exploring the other, wild side of getting around the Bay Area: public transportation.

Maybe, you’ve even considered challenging yourself by giving up your car one day a week or more. However, is that even realistic given the current structure of public transportation in this area?

The truth is that public transportation in the Bay Area is not at the level of what it should be for a metropolitan area of this size—consider the ease with which one can get around London or New York. But that doesn’t mean there aren’t alternatives to taking to the freeways and burning up more gas in your tank.

If you’re lucky enough to be located in the North Bay (San Francisco and Oakland areas), you’re at an advantage. This is probably the best place to get around easily. Commuters move around the city and/or between Oakland and San Francisco via ferry, rail, bus, cabs, shuttles and more. When you factor in your savings on gas and parking, it’s a no-brainer for many to skip the car altogether and head for SF Muni.

Those who are in the South and East Bay are less fortunate, as the number of accessible, connected public transit systems are just not as available. Still, you can get to and from downtown San Jose, avoid high parking fees, and connect to some of the adjacent communities via VTA’s light rail. To see just how easy or difficult it is to make it to work via VTA, check out their web site at http://www.vta.org/. In the East Bay, BART and the Capital Corridor Rail service offer commuter service to outlying communities, as does ACE (Altamont Commuter Express.)

If you’re heading up the Peninsula, consider Caltrain which provides good rail service from Gilroy to San Francisco. Though for many, the distance to and from the rail stops can be daunting. Many businesses today have connector shuttles, while other commuters prefer bringing their bike with them to make the journey shorter.

When you do decide to make the plunge and go “public,” even if for just one trip, a great resource is the San Francisco Bay Area Transit information site which offers new transit trip planning software that includes at-a-glance summaries of multiple trip options, giving you the best route, closest location, fees and more. So go ahead, be brave and jump on the light rail. Your wallet and our environment will thank you for it.

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Announcing Tech CU’s Neighborhood Challenge—Imagine the Possibilities!

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Thu, 25 Sep 2008 15:55:12 +0000

We’re finally very close to opening the doors at our new Financial Center in Dublin in October. Our new branch will be located in the Shops at Tralee, a new mixed-use shopping and living development located at 6601 A Dublin Blvd. Whenever we move to a new location, it’s important that we demonstrate to our new community our commitment to being a great corporate citizen—and we’re particularly excited about the community initiative that we have planned for our Dublin location. Please read the details below:

Do you have a vision for your neighborhood but lack the funds to make it happen?
Tech CU wants to help! As part of our Grand Opening celebration, you’ll have the opportunity to tell us how you would use $3,000 to give your neighborhood (in the Tri-Valley) a change for the better. Tech CU will give a donation of $3,000 to the individual or group with the best idea.

It’s time to get inspired for your neighborhood!

Maybe you want to clean up graffiti?
Organize a park beautification project?
Remodel a playground at a local school or park?
Give funds for a specific project to a local Boys’ or Girls’ Club?

Register with us and tell us what you think needs improving and suggest a local organization or nonprofit with whom we can work to make it happen. It’s as simple as leaving a comment on this initial post with your suggestions!(Remember that you need to be a registered user to leave a comment!)

Submit your written suggestions (in 250 words or less) and feel free to include photos. You can also provide reference hyperlinks to audio (2 min. or less) or video (5 min. or less) to convince us that you have the best idea for how to use the $3,000. (Deadline for submissions is October 20th)

We’ll announce our winning entry via email and a text message on Wednesday, October 22nd, and will award the $3,000 check at our official Grand Opening Celebration in November—more details will follow.

So submit your ideas today! Then come out to celebrate our Grand Opening and see who won!

Tech CU’s Neighborhood Challenge—Imagine the Possibilities is open to anyone living, working, going to school or worshipping in Contra Costa or Alameda County. The community improvement grant must be used to fund a community improvement project in any of the cities in the Tri-Valley* and Tech CU must be able to allocate the funds through an existing nonprofit, local organization or PTA. To submit your ideas, simply leave us a comment!

To sign up to be notified of the winner and updates regarding submissions join us on Twitter by clicking here.

*The Tri-Valley consists of the cities of Pleasanton, Livermore, Dublin, San Ramon and Danville as well as the unincorporated towns of Alamo, Sunol, Blackhawk-Camino Tassajara.

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How much will you spend in retirement?

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Thu, 18 Sep 2008 16:52:55 +0000

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The Correct Answer is: 77–94%

According to the latest study on retirement income by Georgia State
University and Aon Consulting Worldwide, most people should aim to
replace 77 to 94 percent of their pre-retirement income. This amount is
less than 100 percent of income because expenses often drop in
retirement due to the following factors: income taxes go down after
retirement; Social Security taxes end completely; Social Security
benefits are partially or fully tax free; and saving for retirement is
no longer needed.

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You’ve spent hours working diligently with your financial planner to develop a smart retirement strategy that will enable you to meet your target retirement income. Perfect! But how much time have you actually spent thinking about what that target should be?

The truth is, setting a realistic retirement income target can be difficult because an individual’s retirement spending reflects to a large degree your personal lifestyle choices. Are you someone who plans to retire to a more subdued, quiet lifestyle? Or, do you see yourself living it up in your golden years, doing more than you could ever have accomplished while you were working?

These factors and many more will influence how much you spend in retirement and ultimately how much you’ll need to save. Here are just a few things to think about:

How long do you think you’ll live? Most financial planners create retirement plans that stop at age 85 (the average life expectancy at age 65 is 10.3 years for men and 12.4 years for women). But perhaps a long, healthy life is typical in your family? Also remember that inflation and taxes will continue to go up the longer you live.
What potential medical expenses and possible long-term-care costs could you be faced with? Keep in mind the rising cost of healthcare in the U.S. and the increasing burden that is being placed on individuals to cover those costs.
In retirement, you probably will not have the same level of work-related expenses, such as transportation to and from work, clothing costs, etc.
Time will influence your spending habits. With more time on your hands, you may purchase goods more efficiently or possibly substitute home-produced goods for what you typically went to the store for in your re-retirement years. In general, research shows that retirees don’t eat out as much.
What will your situation be with family and your home? Will your children be out of the house? Will your mortgage be paid off? Do you expect to support key family members?
If you do plan on travelling more, how will you do it? Are you a luxury traveler or will you keep to a tight budget and look for deals?
When do you think you’ll retire? Right now, the average age of retirement is 62, although 40 percent of retirees said that they retired “earlier than expected” due to job loss, illness or disability. Others prefer to defer collecting their Social Security retirement checks, knowing the amount they’ll eventually receive will increase the longer they wait to collect (up to the age of 70).
How will your spending taper off as you grow older? Many retirees say their older friends (in their late 70s and 80s) aren’t as active and don’t go out as much. This will certainly affect the rate at which you draw on your savings.

Regardless of what your plans are for retirement, you should take the time to carefully think through several possible scenarios. Being realistic about what your lifestyle will be after you finish working will help you to better plan and prepare today. If you’d like to read more about setting a realistic retirement target, check out some of these articles:

Forbes.com: The Spending Question

MSN Money: 7 pitfalls retiring baby boomers must avoid

The Street.com: How to Plan Spending in Retirement

MSNBC: Retirement Myths and Realties

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Why are mortgage interest rates affected by Fannie Mae and Freddie Mac?

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Fri, 12 Sep 2008 23:08:31 +0000

With news of the recent ‘rescue’ of Fannie Mae and Freddie Mac by the U.S. Government, mortgage interest rates have dipped to 5.93 percent this week, down from 6.35 percent last week. Perhaps you’re wondering, “Why is that?”

Fannie Mae and Freddie Mac are government sponsored enterprises (GSEs) that receive financial support from the U.S. Government. This enables them to borrow money from foreign investors at low interest rates within the secondary mortgage market, which in turn gives them the ability to buy loans from direct lenders who can then provide fixed interest rate mortgages with low down payments to home buyers. Today, Fannie Mae and Freddie Mac control about 90 percent of the nation’s secondary mortgage market.

The ‘rescue plan’ for Fannie Mae and Freddie Mac includes many provisions, several of which are specifically aimed at ensuring the two GSEs not only remained stable but that they will continue to help stimulate the U.S. housing marketing:

The federal government is ready to inject money in the two companies if either Fannie Mae or Freddie Mac is found to have liabilities that exceed its assets (an assessment to be made quarterly).

Fannie Mae and Freddie Mac will increase mortgage funding between now and the end of 2009 to help stabilize the housing and mortgage markets.

The U.S. government will start a program to buy pools of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. The program, which is to be operated at the Treasury secretary’s discretion—will launch with an initial $5 billion worth of such purchases to be made in the coming days.

These are some of the main reasons you’re seeing interest rates drop. So is now the time to consider refinancing on a new home purchase? Here’s what Steve Donahue, Tech CU’s AVP of Mortgage Origination says:

“Yes, with a drop in interest rates it an excellent time to consider a refinance. Today’s 30-year fixed rate is lower than last month’s start rate on an ARM. A borrower who has equity in their home should take advantage of the window and convert to a fixed rate loan, pay off their HELOC or consider cash out for home improvement or investment. If the goal is to stay in their home more than 5 years, the conversion to a 30-year fixed rate loan will create a stable payment, aid in financial planning and save money over the life of the loan.”

If you’d like to read more on Fannie Mae and Freddie Mac, their origins, and the ‘rescue plan,’ check out some of these articles.

Money Savvy Blog
Conforming loans: Could they help you save money?

San Jose Mercury News
Mortgage brokers, real estate agents: Rate drop is spurring activity
NPR
The Future of Fannie Mae and Freddie Mac

San Francisco Chronicle
Feds to take over Fannie Mae, Freddie Mac

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Who’s Digging through Your Trash?

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Fri, 05 Sep 2008 20:33:13 +0000

Caution—discarded documents can put you at risk for identity theft!

The next time you get ready to throw out old bills or junk mail, you may want to stop for a moment and reconsider what types of information you’re putting in your trash bin. Today, a very common way for identity thieves to capture personal information is to pick through your trash or recycling. To protect yourself and family, always shred documents that contain confidential or personal data, especially those that may include your social security number or any important account numbers, such as:

Charge receipts
Copies of credit applications
Insurance forms
Physician statements
Checks and bank statements
Expired charge cards that you’re discarding
Credit offers you get in the mail

You can also take a preemptive step and stop those credit offers from coming each week through opting out of receiving prescreened offers in the mail by calling: 1-888-5-OPT-OUT. You will be asked to provide your Social Security number which the consumer reporting companies need to match you with your file.

So, let’s say you have been careful of what you’re putting in the trash all year. The problem is, now you’ve got a mountain of discarded mail, receipts and old papers taking up space. The good news is that October can be the month you safely get rid of it all.

On Wednesday, October 1st, Tech CU will be holding its 3rd annual free Shred Day. We’ll provide access to a secure shredder truck for members to safely dispose of unwanted confidential documents. From 10:00 a.m. to 2:00 p.m., you can stop by Tech CU’s San Jose Financial Center, located at 2010 North First Street (at Brokaw Road), and dispose of financial statements, canceled checks, credit cards, unused convenience checks, tax information, compact discs, and floppy disks.

Simply being just a little more conscientious about the types of information you’re putting in the trash can go a long way toward protecting your identity. And that’s important, because those who do have their identity stolen can spend months, even years trying to get it back.

Tech CU Shred Day
When: Wednesday, October 8, 2008
Time: 10:00 a.m. to 2:00 p.m.
Where: San Jose Financial Center, located at 2010 North First Street (at Brokaw Road)
It’s free! Stop by and securely shred your confidential documents.

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Twitter: Hey Tech CU, what are you doing? (in 140 characters or less!)

ggarcia@techcu.com (Gabriel Garcia - Tech CU Marketing) — Fri, 29 Aug 2008 01:19:54 +0000

Among the “hyperconnected,” the free social networking and micro-blogging service Twitter has become the Über communication tool of choice.

The Twitter service allows registered users and their followers to communicate with one another via instant messaging, SMS, RSS, email, or through applications such as Facebook, Twitterific or Blogs.

So you have something to “tweet,” keep it short and sweet!

“Tweeting,” the term used to describe the process of updating a Twitter profile with a broadcast message, must contain itself to the confines of a mere 140 character text input field. While it’s definitely not a whole lot of space to write your personal biography online, it’s certainly more aptly suited for updating your network of friends with a status message on your current state of affairs.

The text limitation is actually part of the charm of Twitter, as the short text entries force the user to be succinct and creative in their composition of messages.

There have been stories of people using the service to announce travel plans, documenting their commutes in gridlock traffic, and even sharing changes in occupation (someone actually tweeted their untimely exit from a company in a series of updates).

You may have even recently heard that a certain democratic candidate for President used this service exclusively to notify subscribed followers of his choice for the Vice President candidacy.

The simple fact is that many mainstream companies are now using this technology to “stay connected” with a growing demographic of consumers that choose to subscribe to dynamic updates via services like Twitter.

Actually you need look no further than to companies like CNN, Apple, NY Times, Amazon, Dell, Southwest Airlines, and heck, maybe even your very own Credit Union.

Tech CU has recently setup a Twitter account at the following location: http://twitter.com/TechCU and we invite you to follow along with us as we “tweet” about our latest product offerings, events, promotions and more!

Setting up a Twitter account is relatively easy, but here is a really good guide for “Twitter Newbies” from CNET.

Happy Tweeting!

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