Understanding Mutual Funds: More than a roll of the dice

Each month I meet people, including clients, who own mutual funds, but either aren’t sure what they are or what role they can play in their retirement planning. I blame 401(k) and 403(b) retirement funds for this. One opportunity to learn more is via my new class Mutual Funds and Merlot!

What I mean is that very often, companies of all kinds (including employers, financial services reps and the information you receive from your Benefits department leads you towards the decision tree of “We have these 20 funds for our plan – pick one now”  – and go!  By the way, you have five minutes. Whether it is five minutes or five days, sometimes; indeed many times, the information is not understood by the employee.  Despite everyone’s best efforts, employees may not understand the foundation of how mutual funds work. And without wine!

Feel like the market is just a roll of the dice? Mutual funds are more like the Monopoly houses than the dice. Photo via Flickr woodleywonderworks

I’ve created an opportunity for you to spend some time with me and a glass of Merlot, in order to better absorb the information about what mutual funds are, (yes, an index fund is a type of mutual fund), how to use them, and why they can lower the risk in your portfolio (retirement or other investment account). Like wine, mutual funds are both simple and complex, full of sin-or part of daily life, global and local, and some are meant for holding a long time in your cellar (or your retirement accounts).

Please join me at my office for an after-work, pre-weekend, informative way to put some fun in mutual funds!

More information and registration is here.         

Registration via Brown Paper Tickets.

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Resist this Faux Fall Color: Pink!

A shopping  item from The Detroit Free Press ran in my local paper this weekend, touting the inevitable pinkwashing that goes on during October – Breast Cancer Awareness Month. As a survivor myself, I fully support awareness, mammograms and health insurance that covers annual exams for women. However, like a good annual physical, it pays to cover all the bases-including faux philanthropy by corporations.

The title was ‘pink’ products that really give back. It began with a brief note to check out any charity recipients of product sales on charitynavigator.com, then went on to highlight 5 products to that “caught the writer’s eye.”

I want to single out one of the suggestions in particular-for True Religion Halle Super Skinny Breast Cancer Awareness Jeans retailing for $198 a pair. Again, quoting from the “article”/marketing puff piece, “The company will donate 10 percent from the sale of each pair of these skinnys to Susan G Komen for the Cure, with a minimum donation of $35,000.” That means they are willing to give 10 percent of the proceeds from 1,767 pairs of jeans to Susan G Komen, a company still reeling from branding problems of its’ own. How many hours of sales is that?

$35,000 is a shockingly low number for a donation from a corporation with $467 million in sales last year (2012). In July 2013 True Religion was acquired by a hedge fund,  aka a ‘private equity fund’, called TowerBrook this year for $824 million. (The stock had traded under the symbol TRLG until the merger.)

A donation of .0042% of the sales price-824 million dollars! Very generous indeed, True Religion!

(As 82% of the funds at Susan G Komen go to the “cure”, the real number going to “support breast cancer” is $28,700.)

Note: To my knowledge, I have never owned any shares of TRLG in the past, as individual shares or in a mutual fund. I am not now invested in any private equity funds.

Related articles

• Pink envelopes Metropolitan Park during Susan G. Komen Race for the Cure Saturday (jacksonville.com)
• WTF Internet? A tweeting bra is not helping cure breast cancer (digitaltrends.com)
• The PinkSploitation of Breast Cancer Awareness Month (upperstclair.patch.com)
• True Religion Breast Cancer Awareness Jeans – The Halle in Pink Ribbon (denimblog.com)

 

Personal Budget or Plan? Words Matter

Words matter.

A picture is worth one thousand words.

It has been said that it takes from 4-7 positive comments to overcome 1 negative one.

How can we use these three statements to improve our spending habits?

If you made a visual spending plan and tried out new self-talk each month, would that make a difference? Might that keep you from derailing yourself? I challenge you to make it so.

For example, you could find a photo of your financial goal and place it in a prominent position-where you can see it every day.

• Try a sign that says $500 savings balance/emergency fund. (save this in one year<$10/week!)
• Take a photo of your full refrigerator-for someone trying to cut down on eating out.
• Post an image of your public library card-so you have the visual trigger for downloading music, book reading or borrowing a movie from the library instead of purchasing  any of those items online. Or send yourself a text message to that effect!

I have three points here that go beyond the usual budgeting tips.

1. How you talk to yourself about your spending matters
2. Use visuals as well as words to make the point to yourself (and your family, if need be)
3. Use affirming language, praise and encouragement to support your behaviors.

Instead of, “I wish I could pay my bills on time”, say to yourself, “When I pay my bills on time, I feel good and I will have more money to spend, because I won’t be paying late fees.

Instead of, ” I must have that new song from iTunes right away”, remind yourself of your online music spending plan, and figure out if you have the funds this week. When you match up your plan with your spending, it is a powerful feeling and you can reinforce it. Oh-“I don’t have more money in that bucket this week, I’ll place this song on the top of the list next week”.

iTunes (Photo credit: ʇhamin – free lancer)

Instead of saying to yourself, “I’ll add to my emergency savings account at the end of the month, or at the next pay period”, say,”I will send a sum each pay period to my emergency fund via direct deposit, so that I am able to meet small unexpected expenses without using my credit card”. Doesn’t that feel more powerful?

Save Money (Photo credit: 401(K) 2012)

When you do something right, affirm that behavior in your head and heart to reward yourself. It is important to acknowledge these smaller steps as you build new habits.

Say, “Wow, I did that”; or “It will be so cool to see my savings account grow”; or even, “I didn’t know that homemade sweet potato fries would be so tasty”.

Related articles

• Free Music From The Public Library To Your iTunes Library (denver.cbslocal.com)
• Little Known Ways to Stop Busting Your Budget (enoughtimemoms.com)