FAQs - Delta
If you are a Delta employee we encourage you to sign up for the DELTA 401k Maximizer newsletter in order to gain a better understanding out how the 401k Maximizer system works. If you are a DELTA emloyee; this is the newsletter for you. This newsletter provides monthly recommendations for the DELTA retirment plans.
There are other services available to manage my Delta Airlines 401k retirement plans, what makes your system better?
That's a great question. There are two main issues you want to consider when managing your retirement portfolios. The first is a method to show you when it's safe to be fully invested, partially invested or out of the market entirely in the safety of cash and the second is a thoroughly tested fund selection system.
We say managing because each of us should be actively upgrading our retirement holdings monthly to the best performing funds if you want to outperform the market over the long term. Buy and hold asset allocation is a recipe for under performance whether it's with your retirement portfolio or with other dollars. Look at it this way, on Wall Street money is constantly rotating from sector to sector and industry to industry. Normally, when the market favors a certain area like oil stocks, or biotech, or international stocks those areas will start to trend, and trend, and trend, for months on end. If the funds you bought to hold 2 years ago don't hold the kind of stocks that are being favored by large institutional investors at the time then they will languish month after month under performing the major indexes and occasionally even lose money when the rest of the market is going up. This is why it's critically important to constantly upgrade your holdings to the funds which are outperforming others over the recent past in order to focus your investments in those funds which are holding the stocks that the major institutions are accumulating at the time.
Before jumping into the market though you want to analyze overall market conditions to determine whether the market currently has a positive or negative bias. The 401k Maximizer Major Market Analysis tells investors whether it's safe to be fully invested or partially invested in the safety of cash or cash equivalents as we walk forward in time.
The bottom line is that there are times when even the most aggressive investors should pursue a conservative portfolio and conversely there are times when even the most conservative investors should be aggressively invested in the market. Our goal is to guide you with a clear perspective about what kind of environment we are in so that you can adjust your portfolio through time.
This whole issue is so important it forms the backbone of the 401k Maximizer. At 401k Maximizer we look at 7 different measures of underlying market internals, sometimes referred to as market breadth, of both the NASDAQ and the NYSE to determine how aggressive our fund recommendations should be. These market internals gauge the strength of both the NASDAQ's and NYSE's up volume, down volume, advancing issues, declining issues, accumulation, distribution, and trend strength on a weekly basis. All of this information forms a consensus pointing to either a positive or negative market bias displayed by one simple indicator for each index. We show both of these indicators to our subscribers in every newsletter.
These indicators drive our recommendations about whether it's safe to be fully invested or partially invested in the safety of cash or a cash equivalent at the time.
The second key component of any successful method to manage retirement funds with is a fund selection system. 401k Maximizer uses a ranking method based upon each fund's multi-period weighted returns. This approach is considered one of the most robust mutual fund selection techniques available and has been used very successfully for years by professional money management firms specializing in mutual fund up-grading.
Which investment method is best for me?
Risk vs. Reward
The Aggressive method remains 100% invested in the best ranked funds on a rolling month to month basis. This allows investors who don't like adjusting their market exposure to account for current market conditions, to stay invested in the highest ranked funds. In most market conditions, short of a bear market, the Aggressive method will probably outperform the Moderate and the Conservative risk approaches, but not by a lot, and clearly not enough so that subscribers approaching retirement, or in retirement, or subscribers who just don't want to see their account values decrease a lot from their peak values should follow the Aggressive approach.
Conservative and Moderate risk portfolios reduce their market exposure by holding fewer funds to lower portfolio volatility when the bias of the market becomes negative.
There are several other value added features of the 401k Maximizer system that you'll want to carefully consider, including:
* Ease of Use
* Clear, user friendly, presentation
* Specific Recommendations for Conservative, Moderate and Aggressive investors
* Different market exposure level recommendations for Conservative, Moderate and Aggressive investors when market conditions and bias deteriorate.
* 401k Maximizer uses the actual price data for each available fund. The market index data is from FastTrack.
* Recommendations are made before the end of the month. Additionally we monitor the markets daily and if it is necessary we will send you an urgent mid-month set of recommendations.
Why spend all the time upgrading my 401k holdings every month? I feel more comfortable just buying and holding 2 or 3 good funds.
One of the golden nuggets of your retirement plans is the ability to upgrade to the best performing funds monthly without worrying about short term capital gains taxes and the commissions you incur in a retail account. Consider this, the commission to buy and sell a fund from a low cost broker outside of the retirement plan might run $25 to $50 per month every time you made a change. Then multiply this 4 or 5 if you hold 4 to 5 funds at a time and you can see how expenses can kill your performance very quickly.
To see the real power of constantly upgrading to the best performing funds on a rolling month to month basis let's compare similar gains in the market with a buy and hold system versus an upgrade system. Hypothetically, we're going to make 2 investments. In our first investment we buy fund ABC at the beginning of the year and hold it for the entire year. This, buy and hold strategy gives us a return of 20% for the year, a great return! With our second investment we buy fund ABC at the beginning of the year and then sell it several months later with an 8% gain. Our model now says to buy fund DEF which we purchase and hold for a 7% gain. Next, the model says to buy fund GHI which we hold for a -2% loss. Finally, our model says to buy fund JKL which we hold to the end of the year for a 7% gain. Now by the end of the year our upgrading has produced what appears to be a similar 20% gain = +8%, +7%,-2%, +7% but in reality we made more money than buy and hold. Our buy and hold approach gained 20% but our upgrading produced a yearly gain of 21.18%!!
How did this happen? It's because when we continually upgrade to the best performing funds throughout the course of a year we are constantly leveraging our gains from the previous investment into our new investment. To make this clearer from the example above after our first gain of 8% a $100 starting value is now worth $108. So when we make the next purchase with a gain of 7% we are realizing a gain of 7% on our original $100 investment plus a gain of 7% on the $8 gain from the first investment. Remember that our account had grown to $108 before we made the second investment. And when you do that over and over and over again throughout the year you leverage your gains with the power of compounding again and again. It's that power of compounding gains over and over again that is the magic golden nugget of monthly upgrading. Albert Einstein referred to the power of compounding as the 8'th wonder of the world and when you see it in practice you have to agree that not only does E = M*C*C but that compounded gains are magical!
How do I use your system?
It's easy. Just subscribe and you will receive an email message during the last week of each month announcing that new recommendations are available. This message will prompt you as a subscriber to log into the 401k Maximizer web site and Sign In. Once you have signed in you are able to download the next month's newsletter. We publish the newsletter on the last weekend of every month in order to give subscribers time to re-allocate to the new recommendations before the beginning of the new month. 401k Maximizer is also published during the course of the month if any significant market changes have occurred which would warrant an increase or decrease in market exposure. If you do not receive an email message towards the end of each month, you can always visit the web site and Sign In to see if new recommendations have already been posted.
The key is to stay with the trend constantly up-grading to the best performing funds.
Notes: The information and data contained herein are compiled from what we believe are the most appropriate sources available and are believed to be reliable, but accuracy cannot be guaranteed. 401k Maximizer, Inc. disclaims any and all liability for losses that may be sustained as a result of using the data presented herein. Past performance is no assurance of future results. All investments involve risk. You should invest only after careful examination of fund prospectuses.
401k Maximizer, Inc. monitors fund performance and publishes a monthly newsletter. The goal of 401k Maximizer is to take the guess work out of the 401k choices and to help every employee manage his or her own 401k plan. 401k Maximizer is a newsletter monitoring the 401k investment alternatives available to employees of Delta Airlines. Delta Airlines is a registered trademark.