Index Fund Advisors
Founder & President
Mark Hebner is Founder and President of Index Fund Advisors, Inc. (IFA), author of the popular book, "Index Funds: The 12-Step Recovery Program for Active Investors", and is a respected speaker, news contributor and provider of authoritative information and education on investing.
"Index Funds" has received praise from financial industry and academic luminaries, including John Bogle, David Booth, Burton Malkiel, as well as Nobel Laureates Harry Markowitz and Paul Samuelson. It was nominated as one of the three all-time greatest investment books, along with the writings of John Bogle and Warren Buffett.
IFA avoids the futile, speculative, and unnecessary cost-generating activities of stock, time, manager, and style picking. Contrarily, IFA employs a disciplined, quantitative approach that emphasizes broad diversification and consistent exposure to the structural trends of global publicly-traded markets.
IFA is a true fiduciary financial advisory firm, compelled by law to act in the best interests of clients, always – something the investing public, mistakenly, believes all financial advisors are required to do.
Mark contends that one can be a passive investor but still apply active intelligence to the process of investing. He takes an evidence-based academic approach to this process and illustrates it with art and science.
Mark was a member of the Young Presidents' Organization for 19 years and is currently a member of the World Presidents' Organization and the Chief Executives Organization.
Prior to founding Index Fund Advisors in 1999, Mark was President, CEO and co-Founder of Syncor International (previously a public company - SCOR) from 1975 to 1985. In Jan. 2003, Cardinal Health acquired Syncor for approximately $850 million. As a division of Cardinal Health, it is the largest radiopharmaceutical network in the United States.
BS Nuclear Pharmacy, University of New Mexico
MBA, University of California at Irvine
Assets Under Management:
Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
In order to contribute to an IRA, you must have earned income. As a 52 year old, you are allowed to contribute the minimum of $6,500 of total compensation in 2015. Worker’s compensation is not considered earned income (see IRS Publication 525). Depending on your financial goals, we would recommend investing the $125K in a globally diversified portfolio of index funds that match your risk exposure with your risk capacity. You can learn about your risk capacity score by taking a survey like this. From there, we would recommend that you speak to a Wealth Advisor about your financial goals. They will help to give you clarity about your finances.
First, risk and return go hand in hand. There is no such thing as a free lunch. For someone who is 26 years old, it is imperative for you take a healthy amount of risk (at least 70% in stocks). The best way to gain exposure to both the stock and bond markets is to hold a globally diversified portfolio of index funds. Forget trying to day-trade, pick winning stocks, time markets, or invest money with hot mutual fund mangers. All of these strategies have led to more destruction of wealth versus a low-cost index alternative. There are times when markets are going to be very turbulent, but you need to stay in it through thick and thin. Time is on your side.
Stay away from buying individual bonds. Transaction costs are too expensive for the amount of money you are looking to invest. Buy a low-cost bond fund instead.
Ideally, you should have 6-12 months of living expenses set aside for a rainy day, with the rest of your assets invested based on your longer term goals. This can include retirement, college planning, purchasing a home, starting a business, etc. Your 401(k) should be heavily invested in equities since you have 35-40 years before you will touch those assets. Shorter term goals should be invested very conservatively using money market funds, short term bond index funds, and maybe a little bit of stock index funds.
It depends, if your employer offers a better and more cost-effective 401(k) plan, we would recommend rolling the assets over into your new 401(k) plan. If your former and current 401(k) plans are very expensive with poor investment options, we would recommend rolling the assets over into a Rollover IRA, which you can open with a regular custodian like Charles Schwab, Fidelity, or TD Ameritrade. A good starting point is to understand how much in fees you are paying for your current 401(k). If it is above 2.00%, chances are you are paying too much to be in the 401(k) plan. Next, you want to have investment options that offer index funds from fund management companies like Vanguard, Dimensional Fund Advisors, and Fidelity. You want to be able to invest in these options versus active funds. For the most part, you are better off rolling the assets over into a Rollover IRA and investing in index funds within the IRA. You will forgo recordkeeping and third party administration fees that you no longer need. Further, I would strongly urge working with a Wealth Advisor to help you with your financial needs, even if you are relatively young.
We cannot speak to which MBA concentration would be in your best interest.
The two traditional investment vehicles are stocks (equity) and bonds. If you own stock, you are shareholder in the company which gives you access to the future profits and losses of the company whether it is in the form of a dividend or future appreciation/depreciation in the value of the stock you own. Stocks are riskier than bonds because there is no guarantee that the company will be profitable in the future. If you own a bond, you are acting as a lender of money to a corporation or government agency for a predefined period of time. As a lender you receive interest on the principal you lent with the commitment to return your future principal at the time the bond matures. Bonds are seen as a safer investment since there is a defined period of time in which you are expected to receive your money back. Plus, if the company goes bankrupt, you have priority over stockholders in collecting any residual value. So if you are moving your assets from bonds to stocks, you are deciding to take more risk by forgoing a predetermined payout for a very uncertain future payout. For those who have held globally diversified portfolios over long periods of time, they have been rewarded with a higher return to compensate for the additional risk.
$5,500 if you are under the age of 50. $6,500 if you are age 50 or older. If you are married, you can also make a spousal contribution making it $11,000 if you are under the age of 50 or $13,000 if you are age 50 or older. The spouse must not be working. Also, you must be filing your taxes “married filing jointly.” There will also need to be two separate IRA accounts; one for each spouse. The issue of saving in a 401(k) and an IRA is whether or not you will be able to deduct your contributions from your income tax return. Based on your adjusted gross income (AGI) you may be able to deduct all, partially, or none of the contributions you make to a Traditional IRA. We recommend consulting your accountant or tax preparer for your specific situation.