What is Annuitization? What is an Immediate Annuity?

One of the most confusing and least understood terms for the investing public is annuitization. Unlike stocks, bonds, mutual funds and exchange traded funds (“ETF’s”), annuitization does not come up in cocktail party or water cooler conversation very often. What does it mean?

Many investors have money saved and invested in a fixed or variable annuity – two types of contracts issued by insurance companies. Annuitization is the process of converting annuity funds into a stream of income, usually paid on a monthly basis. Choosing whether to annuitize or not is very important because often you can’t change your mind once payouts begin.

There are several ways to “annuitize an annuity” including but not limited to: Read the rest of this entry »

Happy 4th of July, Lessons From Our Forefathers

Perseverance and spirit have done wonders in all ages. – General George Washington

Have you read David McCullough’s book 1776?  If you haven’t, you might not find a better addition to your summer reading list – particularly over this long holiday weekend.  First published in 2005, it’s an entertaining must read not only for its historical recounting of our nation’s first year, but for its lessons in courage and perseverance.

For today’s investors, the book is a reminder of the old saying, “that which is well achieved is usually well earned!” Read the rest of this entry »

How Are My Investments Doing? Methods For Measuring Investment Performance

 

This is a common question we receive. Over the years, a frequent method I’ve observed investors use to answer this question is a simple rate of return, generally known as a holding period return. But there are two other methods available, and for various reasons I’ll show below, they are usually more appropriate to use.

Holding Period Return (HPR)

Also referred to as your cumulative return, this value does not take into account the impact of time (did it take 1 year or 9 to earn the return?), and does not adjust for the impact of what dollars were invested, and when. It is generally reported as a single return percentage.

Internal Rate of Return (IRR) Read the rest of this entry »

The Difference Between Mutual Funds and ETFs

This is a question we get a lot here at Callahan Financial Planning, and with all the recent news and new options, I thought it would be a good topic to revisit.

As a refresher, let’s start with a quick note on what Mutual Funds are:

  • An Investment Company that invests shareholders money in a (usually) diversified portfolio of securities like individual stocks or bonds.
  • Assets are held in custody at a third-party bank, and are subject to regular inspection by the SEC in addition to any independent auditors to the bank and mutual fund. Read the rest of this entry »

Selecting Investments Or An Investment Advisor

This is the fourth in a four-part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Whether or not you choose to keep your previous employer’s 401(k) where it’s at, roll it over to your current employer or move it to an IRA, you will still be responsible for its management and investment direction.  As discussed in the previous post, that can be a challenge if investing is not your specialty.  Don’t worry – we can help.

Our investment management service ensures that a financial planner can help you identify the advantages and disadvantages to holding your investments in a employer retirement plan or an IRA. Read the rest of this entry »

Should I Leave My 401(k) With My Previous Employer?

This is the second in a four part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1 | 2 | 3 | 4

Are you one of the many people that still have company retirement plans (401(k)s, 403(b)s, etc.) held at your previous employer(s)?  As with all decisions we face, the decision to rollover a company retirement plan must be done with adequate information and disclosure so that you know in detail all of the advantages and disadvantages related to each possible choice.  With that in mind, lets discuss the pros and cons of keeping your retirement funds in your previous employer’s 401(k). Read the rest of this entry »

What Should I Do with My 401(k) After Changing Jobs?

This is the first in a four part series designed to help you determine the best way to proceed with your previous employer’s company retirement plans, including 401(k)s, 403(b)s and more. Part 1| 2 | 3 | 4

What do you think about when you get a new job?

If you’re like most, you’re focused on what the new employer expects from you, learning your position, new processes and dozens of other details that come along with a new position.

This can be a very stressful time for any individual and although it’s the last thing anyone wants to think about, it’s important to remember your company retirement plan(s).  These include 401(k)s, 403(b)s, SIMPLE IRAs, Thrift Savings Plans and more.  If you’re not consciously thinking about your 401(k) or other employer sponsored plan it can be easy to think “I’ll get around to it later” and eventually forget about it all together. Read the rest of this entry »

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