10-24-2019 Columns

Don’t change 401(k) mix during market drops As you’re well aware, we’ve seen some sudden and sizable drops in the financial markets in 2019. While market volatility is nothing new, the recent plunges happened during a period of general political and economic unease. Still, it can be harmful to overreact to such events – especially if it means making radical changes to your 401(k). And yet, many people do just that. During market downturns, investors often move money from their 401(k)’s stock accounts into perceived safer accounts, such as those primarily containing bonds or other fixed-income securities. This move may result in reduced volatility on your 401(k) statements, and if that’s all you want, you might be satisfied. But you do need to realize the cost involved – specifically, fixed-income investments will not provide the same rate of return that equities (stocks) can. So, if you liquidate some of your equity holdings, you may slow the growth potential of your 401(k), which, in turn, could slow your progress toward your long-term financial goals. Furthermore, if you get rid of substantial amounts of your equities when their price is down, you won’t be able to benefit from owning them when their value goes up again – in other words, you’ll be on the sidelines during the next market rally. Here’s the key issue: A 401(k) or similar employer-sponsored retirement plan is a long-term investment account, whereas moves made in reaction to market drops are designed to produce short-term results. In other words, these types of actions are essentially incompatible with the ultimate objective of your 401(k). Of course, when the market is volatile, you may want to do something with your 401(k), but, in most cases, you’re far better off by sticking with the investment mix that’s appropriate for your goals, risk tolerance and time horizon. However, this doesn’t mean you should never adjust your 401(k)’s portfolio. In fact, you may well want to make some changes under these circumstances: You’re nearing retirement – If you are nearing retirement, you may need to prepare your 401(k) for future downturns – after all, you don’t want to have to start taking withdrawals when your portfolio is down. So, if you are within, say, five years of retirement, you may need to shift some, but certainly not all, of your assets from growth-oriented vehicles to income-producing ones. Your goals have changed – Even when you’re many years away from retirement, you probably have an idea of what that lifestyle will look like. Perhaps you plan to travel for several months of the year or purchase a vacation home in a different climate. These are expensive goals and may require you to invest somewhat aggressively in your 401(k). But you could change your mind. If you were to scale back your plans – perhaps more volunteering, less traveling – you might be able to afford to “step off the gas” a little and invest somewhat more conservatively in your 401(k), though you will always need a reasonable percentage of growth-oriented investments. By responding to factors such as these, rather than short-term market declines, you can get the most from your 401(k), allowing it to become a valuable part of your retirement income. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Expungement policy receives support Just over a month ago, I joined several of my colleagues for a press conference in Kalamazoo to unveil a bipartisan package of bills aimed at reforming our broken criminal justice system and making Michigan a national leader in expungement policy. This package is entering its fifth week of deliberation by the Judiciary Committee, and the feedback provided during public testimony has been incredible. The bills have already gained the support of approximately fifty co-sponsors each and have earned the support of more than thirty different organizations across our state including the Grand Rapids and Detroit Chambers of Commerce as well as the Urban Core Mayors. Giving people who have paid their debts to society an opportunity for a clean slate isn’t only the right thing to do; it’s the smart thing to do. Research from the University of Michigan shows that low-level offenders who have remained crime-free are no more likely to commit a crime than anyone else. A steady good-paying job is the best way to reduce recidivism and ensure that a person leads a crime-free and productive life. In an era of hyper-partisanship, it is refreshing to see that here in Michigan, Republicans and Democrats are coming together to advance common-sense policy that will benefit hundreds of thousands of our fellow Michiganders. I’m thankful for all of the work that Chairman Filler, the Judiciary Committee, and my fellow bill sponsors have put into crafting this necessary legislation. Right here in Michigan, we’re showing that we can work together to improve the lives of our citizens and make our state an even better place to live, work, and raise a family. If I can ever be of assistance to you, you can reach me via email at PaulineWendzel@house.mi.gov or by phone at 517-373-1403. You can also visit my website at www.RepWendzel.com.

Supporting Michigan’s licensed professional counselors There are tens of thousands of licensed professional counselors throughout Michigan whose profession was recently threatened by a proposed rule change from the state Department of Licensing and Regulatory Affairs. The rule change would have revised the profession’s scope of practice. It would have removed counselors’ ability to diagnose and treat their cli