On Monday, September 18, 2017, Gary Allen will be playing golf at the Croatian Scholarship Fund’s 6th annual charity golf tournament. The tournament will be held at Crystal Springs Golf Course in Burlingame, California.
On the program this week, I interview Pat Jarrett of Health Savings Administrators. Pat is a co-founder of the company and is currently its brand ambassador. He was formerly the President and Chief Operating Officer of Health Savings Administrators.
This is a great show for people wanting to better understand the value and the benefits of Health Savings Accounts or HSAs. In particular, investment HSAs are a powerful tool for retirement savings and are not that well known. A great way to explain an investment HSA is to think of it as a medical IRA. You get to save money in a tax deductible manner, letting it grow tax deferred and if spent on qualifying medical expenses, the money comes out tax free.
This triple tax benefit makes it one of the best savings vehicles available to Americans. Listen to the show and find out about the shoe box planning trick that gives HSAs an incredible flexibility when it comes to reimbursements.
Look for the bonus interview materials at the bottom of the post.
Gary Allen on Business – Podcast
BONUS MATERIALS – I recorded some additional materials with Pat focusing on HSA questions and information that business owners and managers will find useful. This includes a little known fact that businesses can select HSA providers that are independent of their healthcare plans. This gives businesses an opportunity to improve their HSA benefit for their employees. This bonus segment is about 18 minutes long! This material did not air on KNBR 680.
I hope you enjoy the interview with Pat Jarrett this week. HSAs are becoming more popular as a benefit and people need to understand how they work. Have a great week.
On the program this week, I talk about the relationship between risk and return. Unfortunately, many people focus on one or the other without truly comprehending the direct relationship between the two. And more importantly, many people do not spend nearly enough time thinking about why they are investing and quantifying that goal.
One to think of this disconnect is to think about gardening in your backyard. If you don’t think about what time of year it is or if you don’t take a peek to see what is happening out there, then you will probably not bring out the proper tools. It does not make sense to bring out the pruning sheers in summer when everything is in bloom. Nor should you be watering when the rain is pouring down.
All of that makes sense for gardening, but seldom do I see the same kind of common sense with investing. Too many folks spend their time worrying about the risk (too conservative), while many spend all their time chasing big rewards (too much risk). The right combination of risk and return focused on a clear goal is a better way to invest.
Segment 1- Imagine an alternative world where disclosure and disclaimers are actually written in a clear fashion to protect investors. While it will never happen, you can use my list to protect yourself.
Segment 2 – In this segment, I focus on risk and return and how it comes into play for retirement planning
Segment 3 – This segment continues our journey into retirement planning. The big picture of what to think about and how to approach this investment goal.
Segment 4 – I cover the factors or levers that people can use to plan dynamically over time. This involves the timing of your retirement, how much to save, when to take Social Security and a few more.
Segment 5 – A short story at the end of the program involving my grandfather, buried treasure “gold”, my father and uncle find the loot and the lost opportunity of investing the gold money.
I hope you enjoy this week’s program. – Gary
If you have a question for Gary, the best way to reach him is via email at firstname.lastname@example.org. You can also try him at the office 916.436.8331 as well.
One of the largest financial decisions a person will make during their lifetime is what to do with their retirement savings when they retire. I have heard many horror stories from folks over the years who have made wrong decisions. The stories often revolve around someone convincing them to buy a complicated and costly financial product. On the program this week, I spend time going through a framework to develop a good decision making process.
Too often, people will immediately be talked into rolling or transferring their monies out of a retirement plan before comparing it to the proposed solution. In other cases, a lack of disclosure or too much faith in the salesperson dooms the transaction and/or the relationship.
The concept of “money in motion” has been taught to financial salespeople for generations. That is, focus on people who are at or near a lifetime event to gather assets. They will be more vulnerable and responsive to sales pitches when they are facing a big decision. It all makes sense, but too often these trolling for dollars safaris end up hurting real people. I have seen many inexperienced or unscrupulous salespeople sell costly financial products that appear to benefit them more than their clients.
On the program this week, I spend time walking through some of the issues that folks face as they get close to retirement and what they should do with their retirement savings. I hope you enjoy the program this week. – Gary
If you have a question or would like to contact Gary, the best way is through Gary’s Email at email@example.com. You can always try to call him as well 916.436.8331.
I often hear about the good old days when everyone in the land had a pension that lasted a lifetime. These good old days come up when people complain about 401(k) plans and how they have failed America. However, were the good old days really that good? I don’t profess to have all the answers, but this memory of the good old days seems to be a bit hazy at best.
First of all, only about half of American workers were covered by pensions. This is hardly comforting to the other half that did not have a pension. And on top of that, just how secure are those old pensions? The answer right now is a big shakier than many remember. Those old pensions are still the same pensions we are living with today.
The reality is many of those pensions are significantly underfunded. The problem of under-funding is present in public and private pension systems. And the scary thing is the PBGC, which is the safety net behind pensions is also running out of money.
In the first segment of the program, I cover the current health of the pension system in the United States. Don’t worry, it can be fixed, but it is going to take a lot of effort and sacrifice.
In segment two, I cover the exciting topic of the fine print. Investment disclosures are something that everyone struggles with. There have been many attempts at trying to develop more effective and simpler disclosures but it does not seem to matter. For whatever reason, disclosures appear to contain some kind of fatal dose of Kryptonite that renders investors oblivious to the risks involved. Unfortunately, I don’t have any simple answer to fix this problem. Caveat emptor still reigns supreme when it comes to purchasing investments.
In segment three, I respond to an excellent question from podcast listener Randy. He had a great question about when is it appropriate to invest in a stable value fund. Most listeners know, I am not a fan of stable value funds, but sometimes you don’t have much choice.
Finally, in segment four, in the remaining time I have, I cover some of the issues or problems that I see with stable value funds. The perceived safety and guarantee of stable value funds make them very attractive to retirement plan participants. It is my opinion that most people would do better if they did not commit their savings to these high cost, low return vehicles.
It was the dreaded spring-forward Daylight Savings Time weekend… so I know many of you may have missed the broadcast. That’s why we have this podcast. I hope you enjoy the program – Gary
If you have a question for Gary or would like to chat with him, the best way is to contact him through email.Gary’s Email firstname.lastname@example.org.
If you are not the emailing type, you can always try to reach him via telephone at 916.436.8331.
On the program this week, I talk about the concerns raised by a trio of professors regarding the health of capitalism in the United States. The professors are calling into question one of the basic tenets of capitalism, the idea of creative destruction. Their argument is America is headed towards a system of winner take all. This is where large companies continue to gain market share and dominate their industry. They argue the primary cause for this is a lack of anti-trust regulation and enforcement. In the first segment of the program, I give you my thoughts on why I think they are off base with this argument. HINT – I think it is a byproduct of the artificially low interest rates that we have experienced for a decade.
Here is a link to the article by Jason Zweig that I mentioned at the beginning of the segment.Jason Zweig Article
In segment two, I spend time talking about one of the few initial public offerings in recent months. Snap Inc. of Snap Chat fame enjoyed a snap, crackle and pop opening (who could resist) on its public debut.
Segment three is another take on the “success” of the Snap IPO. Why does Wall Street continue to dominate the IPO process and the pricing structure? Snap, which burns money at an incredible rate, sure could have used an extra billion dollars that Wall Street passed on to its best clients by pricing the IPO below what the public market would pay just a few minutes later.
Finally, in segment four, I cover, what in my opinion is one of the worst investments for most retirement plan savers. The funds are called many things, but they are commonly known as Stable Value Funds. I believe that most people would reject this investment if they truly understood how it worked. Let me put it to you another way. Would you be interested in an investment where you lock in a low rate of return and give up approximately 75% of the profit that your money generates? It is called spread income and it is not disclosed anywhere to retirement plan participants (Employees) or plan sponsors (Employer). Spread income makes Stable Value Funds the most profitable portion of a retirement plan vendor’s business. And that profit comes at your expense!
I hope you enjoy this week’s program! – Gary
Gary’s Contact Information
If you would like to contact Gary about your financial situation, the best way to reach him is via email atGary’s Emailgallen@prudentllc.com. You can try to reach him at his office, but he is often on the move! 916.436.8331.
Each year, Warren Buffett provides a fabulous read when he releases his annual letter to shareholders. That annual letter is filled with information about Berkshire Hathaway, but the more interesting sections for many folks are the investment stories and anecdotes from the so-called sage of Omaha
In the 2016 edition, one of the primary stories deals with Buffett’s challenge to active management. Nine years ago Buffett made a public bet of $500,000 stating that the S&P 500 would beat the cumulative or average returns of the hedge fund industry over a ten year period of time. Only one fund manager was willing to come forward and take the bet.
The bet is now heading into its final year with hedge funds trailing very badly. At this point, the S&P 500 and Buffett’s charity stand to win the big bet.
On the program this week, I spend time going through the story, the results and in Buffett’s own words the multiple problems of active management. It is a cautionary tale worth the time.
Later in the program I speak about my own concerns with hedge funds. Ultimately, I don’t think hedge funds are a good investment or bet for most people. The cost structure, the lack of transparency and the lack of liquidity are major stumbling blocks in my opinion.
Based on what I have seen over the years, most people would be better off in much simpler, low cost, liquid and transparent investments. Less is often more in the investment world. That rings true to me with costs.
I hope you enjoy the podcast this week.
All the best – Gary
Do you have a question for Gary? Do you need help with your investments? The best way to reach Gary is by emailing him at email@example.com.