By Steve Zimmer
Staff Writer
Personal Finance 101: What is a 401(k)?
As many Bonaventure seniors and graduate students begin to look for and find jobs, it is important to understand that a salary is only one aspect of the total job offer. When offered a first job, the recent hire receives a compensation package that highlights health benefits, tuition reimbursement programs and many other benefits. One of the most important aspects in this compensation package, however, is the 401(k). A 401(k) is a retirement savings plan sponsored by an employer. It allows workers to put a portion of their pre-taxed income into a mutual fund of some sorts. Employers usually give their employees options for which mutual fund to allocate their savings (often based on risk). One of the benefits of a 401(k) is the employer matching employee contributions up to a certain percentage. For example, a 3 percent match means that if an employee puts in 3 percent of his or her $40,000 salary, or $1,200, the company puts another $1,200 in the employee’s plan as well. The employee can contribute more than this $1,200 but the company will only match up to the 3 percent threshold. While retirement is years away, it is important to begin saving early in order to reach your financial goals as soon as possible. Using a 401(k) is a great start towards achieving financial goals and should be taken advantage of to the fullest.
Trading Activity
Don’t Buy
Northrop Grumman Corporation (NOC),
Northrop Grumman Corporation provides systems, products and solutions in aerospace, electronics, information systems and technical services to government and commercial customers worldwide. Despite its strong market multiples and operations, the class decided not to buy NOC at this time due to the overexposure it would create to the aerospace defense sector. The only other holding in the industrials sector is Lockheed Martin (LMT), which is a direct competitor to NOC. As positions are added to the industrials sector, we will revisit the proposal to buy NOC.
Buy
PureFunds ISE Cyber Security ETF (HACK)
The PureFunds ISE Cyber Security ETF is an exchange traded fund incorporated in the USA. This ETF seeks to provide investment results that correspond to the performance of the ISE Cyber Security Index. HACK tracks companies across the globe that are direct service providers or key drivers of the cyber security through hardware and software development. The class decided to buy HACK at this time because of the demand for cyber security as technological developments progress. Just last month, Anthem, Inc. (ANTM), the second largest health plan company in the U.S., announced that hackers broke into a database containing personal information for about 80 million of its customers and employees. There is a clear need for cyber security to protect personal information against sophisticated hackers. By buying this ETF, we gain exposure to a variety of cyber security stocks instead of a single company. HACK also reduces the risk in an industry that is speculative.
Those interested in joining SIMM next year can register for the class or participate in SIMM as an extracurricular activity. Any major and all experience levels are welcome. Researching companies and presenting recommendations provide education that can’t be found in any other class. If interested contact the Long Fund manager Steve Zimmer at zimmersm11@bonaventure.edu
zimmersm11@bonaventure.edu
