Why do Most 401-k Investors Underperform?

Most 401-k investors are passive investors.  One reliable source is quoted as saying that 72% of 401-k participants never change their investment allocation once they sign up.  Then they wonder why their performance is always mediocre.

This is serious business.  This is your money, your retirement, yet many investors do not actively manage their investments.  Most plans do not provide professional management so it is up to you to manage your account.  This is not rocket science but it does require some attention.  There are two things that you should consistently do to reach your retirement goals. 1) You should maintain a consistent practice of contributing to your account each and every month, and 2) you should review your account and determine if you are invested in the best performing funds or options that are provided by your plan.

Many investors have been afraid to be in the market since the crash that occurred in the 4th quarter of 2008 and the first quarter of 2009.  Many people still remain in cash and are missing one of the best investment years of the decade.  What are you waiting for?  Since March, 2009, the markets have been on a consistent rise.  The economy is improving and the immediate prospects for the markets continue to look good.  Sure there will be periodic ups and downs to give you heartburn but the general direction is likely to continue to be up.  If you wait until the markets get back to where they were in 2007, you will have missed most of the opportunity to grow your account.

The S&P 500 ended a fabulous quarter being up 5.39% for the quarter.


PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS.  Investing in stocks, bonds, mutual funds and other investments involves risk, and may decline in value and are not insured by the FDIC or any other Federal government agency.

Reminders for Last Minute Tax Filers

If you are one of the many Americans who waited until the last minute to file your tax return, you may be in for some long lines at the post office. April 15th is reportedly the single busiest day of the year for the post office.  If you must brave the lines on April 15th, a few local post offices will remain open late. To find out about hours of operation for a post office near you visit the USPS Services locator.  Tax returns must be postmarked by April 15, 2010.

Keep in mind that you can file your return electronically through April 15, 2010.  If you extend the return, you will have up until October 15, 2010 to file the return. However, even if you extend the return you will still need to make any payments due by April 15.  Failure to pay at least 90% of federal taxes due will result in interest and penalties.

2010 Health Insurance Coverage Credit

The IRS encouraged both small businesses and tax-exempt organizations to explore and, if qualified, claim the new small health insurance coverage credit created by the Patient Protection and Affordable Care Act (P.L. 111-148), which is available beginning in 2010. The credit was created for eligible small businesses and tax-exempt organizations to either maintain their current health insurance coverage or to begin offering health insurance coverage to their employees.

The maximum credit amount is 35 percent of premiums paid by eligible small businesses and 25 percent for eligible tax-exempt organizations for 2010. The maximum credit amount will increase beginning in 2014 to 50 percent for eligible small businesses and 35 percent for eligible tax-exempt organizations. Generally. an eligible small business or tax-exempt organization is one that pays at least half the cost of single coverage, that employs less than 25 full-time equivalent employees, and that pays an average annual salary of less than $50,000. Small business will be able to claim the credit as part of the general business credit. The IRS will provide further guidance on claiming the credit for tax-exempt organizations. The IRS will also reach out to the business community by mailing a postcard with key information to potential qualifying small businesses.

Richard Taylor Re-elected as Treasurer for French American Chamber

Richard Taylor has been re-elected as treasurer of the French-American Chamber of Commerce.  Richard is our firm’s liaison with HLB International and serves many clients doing business in internationally. He represents many international clients operating in the United States, primarily in the manufacturing and distributing industries.  He continues to be actively involved in the French-American Chamber of Commerce as part of his commitment to staying abreast of international matters in order to most effectively serve clients in these markets.

The Market Continues to Move Upward

The S&P 500 Index capped its best first quarter in over a decade.  It is up 74% from its 2009 low.  The Dow Jones Industrial Average rose slowly yet consistently, to take its five-week gian to 5.8%.  The Nasdaq Composite Index rose to 2403, while the Russell 2000 (small-cap stocks) rose 0.7%, to 684.  Domestic high yield corporate bond funds also rose, adding approximately 0.44% for the week.  Government bonds were down for the week.

Stocks have risen five straight weeks and are pushing 18-month highs.  Stock buyers have seen data pointing to increasing orders, record productivity and an improving but still-hesitant pace of hiring, all of which should bode well for corporate profits.  As a result, they’ve come to expect stellar first-quarter earnings results, which begin to get released this week.  Looking back at the last two stock market pullbacks during this otherwise appreciating market, once a sufficient amount of earnings data was in hand the market participants began to sell the news.  As we get deeper into April that could be the drill again this time.  Be careful of buying too heavily at the top of the market.

In economic activity, the Labor Department was busy releasing the latest employment figures.  The results showed that 162,000 jobs were added last month, however, 50,000  of which were attributable to temporary hiring for the 2010 Census.  The count fell short of the roughly 200,000 Wall Street expected.  Manufacturing expanded for an eighth straight month and in March grew at the fastest pace since 2004.

All this “good” economic news has hurt the government bond market, sending the benchmark yield on 10-year Treasuries up to 3.94%, a 10-month high but still below the 4%-to-4.5% range most believe is in our near future.  There remains no apparent inflation anywhere.

This is all good news.  The bad news is that the government continues to borrow at an unprecedented pace, the future consequences of which are unknown.  We continue to climb a wall of worry.

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS.  Investing in stocks, bonds, mutual funds and other investments involves risk, and may decline in value and are not insured by the FDIC or any other Federal government agency.

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