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The 401(k) Challenge!

Welcome to the 2013 Rockbridge 401(k) Challenge.  This is the easiest competition you will ever face and will take less than 10 minutes to complete!

The challenge is simple, increase your employee 401(k) contributions by 2% or more and see if you actually notice the difference in your day-to-day life.  Our guess is that you will not.

Although a 2% increase does not seem like much when it is withdrawn each paycheck, it can have a huge impact in retirement. For an individual making $50,000/year, the additional retirement savings in current dollars will be:

10 years until retirement – $14,200

20 years until retirement – $42,400

30 years until retirement – $94,700

(5% real return, 3% annual raises, 2% additional salary deferral)

Your future self will greatly thank you!

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The Questions You Should Be Asking

The NY Times blog author Carl Richards hits the nail on the head when he highlights how emotions are once again taking over media and investor behavior as the stock market presses higher and higher. The question being asked is  “Should we buy or should we sell?”  as many rush into the market at its recent highs. He goes on to say the real question investors should ask themselves is “How can we avoid this common behavioral mistake in the future

In keeping with our philosophy at Rockbridge Investment Management he concludes that we can avoid this mistake by having a written investment plan that includes:

  1. Why are you investing this money in the first place? What are your goals?
  2. How much do you need in cash, bonds and stocks to give you the best chance of meeting those goals while taking the least amount of risk?
  3. What actual investments will you buy to populate that plan and why? Make sure you address issues like diversification and expenses.
  4. How often will you revisit this plan to make sure you’re doing what you said you would do and to make changes to your investments to get them back in line with what you said in number 2?
Here at Rockbridge Investment Management, we feel having a written plan and answering these questions is indeed the starting point for successful long term investing.

 

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