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The Palm Beaches' News & Talk
 
 

Brian Mudd

Q&A, how to manage your 401k, What to buy in July (best deals), Best jumbo MTG rates in over a year & more:

 

Cheat Sheet Q&A:

 

Topic:  How to evaluate the performance of your 401k investments

 

This may be a dumb question but how do I know if the mutual funds I'm invested in, in my 401k, are performing well?  I hate to admit it but generally as long as it rises I assume everything is ok. 

 

Bottom Line:  Don’t feel too bad.  You’re actually normal.  Fewer than 40% of all adults who contribute to their 401k evaluate their investment options on a regular basis (every six months or sooner).  You’re thinking the right way though.  You do want to ensure that you’re in good investment choices within your 401k.  Ten minutes here and there can literally lead to hundreds of thousands of dollars worth of difference over the course of your career.  Here are some basics to get started.

 

Each of your investment options in your 401k (which likely has 20 or fewer options) should have a performance history.  Commonly you’ll see year-to-date, 1 year, 3 year, 5 year, 10 year, and lifetime rates of return easily presented when you look at them online.  You’ll want to compare the funds to certain benchmarks.  For example with stock funds:

 

  • Compare large cap stock funds to the S&P 500’s performance
  • Compare mid-cap/growth stock funds to the Nasdaq’s performance
  • Compare small cap funds with the Russell 2000 Index

You want to ensure that your fund options are performing at least as well as their peer benchmarks if not better.  Additionally look for ratings applied from third party evaluators.  For example Morningstar is one of the largest rating services of investment funds.  They rate on a 1 through 5 star scale.  How well rated are your funds?  Are they 4 and 5 star rated or 2 and 3 star rated.  That will demonstrate how they have been faring compared to other like investments. 

 

If you still aren’t sure about how to interpret this information that’s also ok.  The administrator should have advisors that can answer your questions and help you understand your options and how they have performed.  The goal shouldn’t be to trade into and out of investments frequently but instead to ensure that you’re well positioned in the best options available based upon your desires and goals. 

 

Audio Report:

 

 

What to buy for the best deal in July:

 

Bottom Line:  Each month Kiplinger evaluates the items that are the best deals (and worst).  Here is the rundown for July:

 

Best buys right now:

 

  • Home appliances
  • Home furniture
  • Computers
  • Patio Furniture
  • Tools

What not to buy right now:

 

  • School supplies

Some of the deals the entire month will occur this weekend with the 4th of July sales.  Happy shopping!

 

Audio Report:    

 

 

 

New effective debt collection scam to beware of:

 

Bottom Line:  There is sadly a highly effective debt collection scam that’s been carried out across the country since late last year.  The tactic includes a (usually phony) debt collector calling and demanding payment for some debt (generally bogus).  Commonly they’ll access some personal information to figure out where you live, who your family is and perhaps businesses (like medical facilities) you’ve visited.  If you don’t pay the debt they’ll threaten to seek the payment from family, friends or even your employer.  Here’s what you should know.

 

To begin with no debt collector, even in a legitimate situation, can contact any third party and divulge your personal information and debt collection process legally.  If you receive that threat it’s a big clue that you may be talking to a scammer.  Unfortunately the average victim of this “friends and family” scam is paying out more than $1700!. 


If you’re contacted by someone making these types of claims contact the following: 

 

  • The FTC (Federal Trade Commission)
  • The BBB
  • Fraud.org (which has been activity tracking this scam)

 

Always verify the debt that’s being collected independently of the debt collector before forking over the money – just incase.  The scammers are becoming more sophisticated so it’s easier to become a victim. 


Audio Report:  

 

 

 

Buy or refi - especially luxury - now or sooner:

 

Bottom Line:  With every bit of negative economic news we’ve had recently we’ve seen a dip in interest rates.  That’s also being reflected in mortgage rates.  It’s just about the best time so far in 2014 to obtain a mortgage of any sort (with a 30 year fixed at about 4.1% with good credit).  I want to focus specifically on Jumbo mortgages for this entry because the best rates in over a year are occurring right now. 

 

Jumbo mortgages are those originated at over $417,000.  They aren’t backed by Fannie Mae or Freddie Mac and thus have generally higher mortgages rates than conforming mortgages.  Not only are we currently seeing jumbo mortgages nearly at parity with conforming mortgages; at the time of this entry jumbo mortgages with good credit are at their lowest level of 2014.  In fact at 4.2% jumbo mortgages are at their lowest level since May of 2013.  If you’re hunting for a luxury property that will require a jumbo mortgage I’d lock in your mortgage as soon as possible.  If you have an outstanding jumbo mortgage you may be able to benefit from a refi.  Just one month ago the average 30 year fixed rate jumbo loan was nearly .7% higher.  Over the course of 30 years that difference on the average home in our area using a jumbo mortgage is more than $50,000 in savings! 

 

It’s not a matter of if but when mortgage rates head higher.

 

Audio Report:

 

 

 

Microsoft raises the bar in email protection – what you should know:

 

Bottom Line:  Microsoft has added end to end encryption in their emails that they are saying is best in class.  It has been added to Outlook emails immediately.  Here’s the simple breakdown…

 

From the moment you send an email out of your Outlook account until it’s opened it’s encrypted.  That means that if anyone, even the NSA, were to intercept it, the email message would just look like gook.  Additionally Microsoft has said that even if an entity would be able to somehow decrypt the message it would not be the original message sent.  So in essence Mr. Softie is saying that your Outlook emails are completely secure from being compromised – even by our Government.  They also said that their new security will work users of Gmail and Yahoo among others.  However if you can’t open the emails your service provider isn’t using technology that’s up to date and you might consider using a more secure email service. 

 

Audio Report:

 

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