403(b) Strategies
Capital Ingenuity can teach you everything you need to know about your 403(b).

A 403(b) account is a special type of retirement savings account that is often offered to employees of certain types of non-profit organizations, known as 501(c)(3) organizations. One of the most common 501(c)(3) organizations that generally offer investment in a 403(b) account are public education systems.

A 403(b) allows an employee to save a portion of their salary before the money is taxed. The money in a 403(b) account is invested into what are known as "separate accounts" of an investment vehicle known as an annuity. Generally, separate accounts function like mutual funds. Because 403(b) accounts are annuities, which are classified as a life insurance product, they generally provide a death benefit to a beneficiary that the account owner designates.

For employees that are not interested in the benefits and accompanying costs of annuities, employees can instead choose to invest in a 403(b)(7) account. These accounts are funded with mutual funds instead of annuities with separate accounts. Many employees are unaware that they have access to a 403(b)(7) account as an alternative to a 403(b). Unfortunately, some representatives of investment companies that provide both 403(b) and 403(b)(7) accounts only tell potential clients about the 403(b) option because that option may provide the higher commission to the representative.

While 403(b) accounts offer several very important benefits, they are also subject to a variety of rules. Additionally, the concepts of building a portfolio can be somewhat complicated to understand without the proper knowledge. Unfortunately, the interests of the representatives that offer 403(b) accounts are not necessarily aligned with your information needs.

Typically, representatives of investment companies that offer 403(b) accounts are compensated based on how much money you put into your 403(b), not on whether or not you make any money from your investments in it. This can create two different problems. First, there can be an incentive for representatives to push employees into investing more money than they can really afford, while at the same time not helping their clients with managing their personal budgets. Second, there can be an incentive for the representatives to focus their time on signing up as many employees as possible, instead of spending an adequate amount of time educating each employee on different investment strategies.

At Capital Ingenuity, we give our clients an unbiased understanding of their 403(b) and/or 403(b)(7) accounts and educate them about different strategies with which they can invest the funds in their accounts. Our Educators/Coaches are not compensated based on how much money you put into your account, so the only focus is to provide you with a thorough understanding of your account and the investments in it.

Unfortunately, many investors suffered significant losses in their 403(b) accounts when the stock market declined in 2008 and 2009. Many people lost money because they simply did not understand the different investment options in their 403(b) accounts. Employees with a thorough understanding of their investment options were able to reallocate their funds in ways that could reduce risk and possibly even make money during that time period.

If your 403(b) account suffered significant losses, Capital Ingenuity can provide you with the knowledge necessary to give you a better likelihood of getting your account values back up. Investments always have risks associated with them and there are no guarantees. But with a better understanding of the risks and potential rewards in a given situation, you can have the best chance of making money again.