FedEx employees should focus on long-term compounding - using time and reinvestment to grow their money - says Paul Bergeron of the Retirement Group, a division of Wealth Enhancement Group. It's about playing the long game and having discipline - even in volatile markets,' he said.
For FedEx employees, diversifying and following a disciplined asset allocation strategy can reduce risk and improve returns over time,' says Tyson Mavar of The Retirement Group, a division of Wealth Enhancement Group. Knowing your investment mix over different life stages will give you stability and growth for a secure retirement,' she said.
In this article, we will discuss:
1. The Importance of Compounding: Why compounding may help FedEx employees increase the growth of investments over time.
2. Navigating Market Volatility: Investment risk management strategies during market fluctuations to maintain a steady growth trajectory.
3. Effective Asset Allocation: Contribution of asset distribution across different investment categories to maximizing returns and minimizing risks.
For any FedEx employee who has invested in the market, you might want to know how successful investors maximize gain and minimize loss. Though no strategy can guarantee success and all investing involves risk - including principal loss - these six basic principles may help you invest more effectively.
Your Nest Egg May Grow With Long-Term Compounding.
I am a market-invested FedEx employee and I understand the rolling snowball effect. Essentially, compounding generates earnings on reinvested earnings. And the numbers get more exciting the longer you invest your money. Imagine, for example, that you invest USD 10,000 annually at 8%. Your USD 10,000 investment would have grown to USD 46,610 in 20 years if you took no withdrawals. That amounted to USD 68,485 in 25 years - 47 percent more than the 20-year projection. In thirty years your account balance would be USD 100,601. (Obviously this is a hypothetical example and does not represent the performance of any particular investment.) This also means no taxes are paid along the way, so the entire investment capital is preserved. So it is with tax-deferred retirement accounts and qualified retirement plans. Experts recommend fully funding all tax-advantaged retirement accounts and plans you have because of the compounded earnings of deferred tax dollars. This is information I can use as I work for a FedEx employee on financial planning and return maximization.
Although you should regularly review your p
ortfolio like a FedEx employee, the point is that money invested alone can make a big return over time. No need to hit 'home runs' when time is on your side.
Accept Short-Term Pain for Long-Term Gain.
Surviving market volatility sounds simple, right? But what if you invested USD 10,000 in the stock market and one day your stock price drops like a rock? On paper you lost a lot, which negates the point of compounding you are trying to achieve. You can hardly stand still.
The financial market can be volatile, no one can deny that. Yet two things are important. First of all, a more diversified portfolio means a greater chance of reducing risk and increasing the probability of profit. Past performance does not necessarily mean future results, but the stock market trend has historically been upward. So as a FedEx employee, consider your time horizon when developing an investment strategy. For soon-to-be-used assets, you may not want to sit on the market and should consider principal-protecting investments. For years away goals, however, long-term thinking is necessary.
Second, historically during periods of market or economic volatility some asset classes and certain investments have been less volatile than others. The changes in bond prices have generally been smaller than stock price fluctuations. Diversification alone cannot provide a profit or protection against loss, but you can reduce risk by distributing your holdings across different asset classes and asset types within each asset class. Considering an investment strategy? FedEx employees might find the following information useful.
Allocate Your Wealth Through Asset Allocation.
You allocate your expenditures across different investment categories - or asset classes -. Typical asset classes are stocks, bonds and cash or currency alternatives like money market funds. Subcategories such as aggressive growth stocks, long-term growth stocks, international stocks, government bonds (U.S., state, and local), high-quality corporate bonds, low-quality corporate bonds, and tax-free municipal bonds are also called assets classes. A fundamental asset allocation would presumably include stocks, bonds (or stock-and bond-based mutual funds) and cash or cash alternatives.
FedEx employees need to understand two reasons why asset allocation is important. Second, how you structure your assets is probably the most important factor affecting how your investments perform - and for some - the single most important. Essentially, the first decision about how to divide your money up among equities, bonds, and cash could be more important than any other investment decision later on.
Allocating investment dollars across asset classes that do not respond to the same market forces in the same way at the same time reduces market volatility and improves long-term return prospects. Your investments in one asset class may be performing poorly but assets in another may be performing better. Gains on either can recoup some of the losses on the former and reduce the total effect of the portfolio. In response, FedEx employees should diversify to limit risk and volatility.
Consider Your Time Horizon When Making Investment Choices.
As a FedEx employee, you have to consider how quickly you might need to change an investment to cash without losing the principal (your first investment) when choosing an asset allocation. The sooner you will need your money, the more prudent you should be with it - in investments with relatively stable prices. Avoiding a situation where you need to quickly spend money that is locked up in a declining investment.
That means as a FedEx employee, you should weigh your investment decisions against how soon you plan on using the money. Should you need the funds within 1 to 3 years, you can put them in a money market fund or other cash alternative designed to protect the principal investment. It might yield a lower rate of return than more volatile investments such as equities, but you can rest assured that your principal is secure and readily available - whatever the market conditions of the day - every day. If you have a long time horizon - for example, if you're saving for a retirement many years away - you might be able to put a larger proportion of your assets into something that has more volatile price fluctuations but potentially greater long-term growth.
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Note: Check out the fund's investment objectives, risks, fees, and expenses outlined in the prospectus before you invest. Read the information thoroughly before you invest. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund wants to keep your investment at USD 1 a share value but you can lose money by investing in it.
Dollar Cost Averaging: Investing Consistently and Often
Dollar cost averaging lets FedEx employees buy shares of an investment at regular intervals over a long period of time for a fixed dollar amount. High prices will buy fewer shares of your fixed-dollar investment. It will buy more shares when prices are low. A normal, fixed-dollar investment should deliver a lower average share price than buying a fixed number of shares at each investment interval. A classic example of dollar cost averaging at work is a workplace savings plan - a 401(k) - that takes the same amount from each income and invests it through the plan. Such strategies can help FedEx employees realize maximum gains.
Like any investment strategy, dollar cost averaging cannot assure a profit or protect against a loss in a declining market. For the full benefit of dollar cost averaging, you as a FedEx employee must consider whether you can afford to keep investing when the market is down. An alternative to dollar cost averaging is to try to 'time the market' by predicting how the shares will move over the next few months to get your whole investment at the lowest point. Market forecasting usually is not profitable though. The discipline of regular investing is a more manageable strategy and automating it is a bonus.
To rebalance your portfolio you would buy more of the underperforming asset class - maybe using some proceeds from the overperforming asset class. You can also keep your present asset allocation but assign future investments to a class of assets you want to grow over time. Yet despite that, employees of the FedEx should understand that failing to periodically review their holdings will not tell them whether a change is necessary. Some select a date every year for an annual evaluation.
Added Fact:
A Dalbar Inc. study found that emotional decision-making and market timing drive the average investor far below the market. The study said that over a 20-year period the average investor returned just 5.19% annually versus 9.85% for the S1and1P 500 index. This performance gap largely reflects investor reaction to short-term market movements and emotional investment decisions. For a 60-something FedEx employee looking to maximize your investment success, discipline and avoiding emotional reactions to market volatility are critical. Focusing on long-term goals and following a defined investment strategy may yield better investment results. (Source: Dalbar Inc., Quantitative Analysis of Investor Behavior 2021 (February 2021).
Added Analogy:
To invest successfully is to tend a garden. Consider yourself a veteran gardener with a bunch of plants that all need special attention. Just as diversifying your investment portfolio across asset classes is important, tending a diverse garden ensures a healthy landscape. You know some plants bloom earlier and some take time to grow, and some investments pay off quickly while others pay off over a long period of time. By periodically assessing your garden's needs, adjusting watering and fertilization accordingly, and periodically pruning to maintain balance you maintain its beauty. Like with investing, regular review of your portfolio, adjustment of asset allocation as circumstances dictate and restraining of impulsive decisions during market swings will all help you build a healthy investment habit. As a well-tended garden brings joy and fulfillment, following these principles could help FedEx employees approaching retirement and current retirees make more successful and rewarding investments.
Sources:
1. Warren Street Wealth Advisors. “FedEx and Large Company Employees.” Warren Street Wealth Advisors, warrenstreetwealth.com . Accessed 24 Feb. 2025.
2. Bluering Investors. “Investment Strategies By FedEx CEOs.” Bluering Investors, blueringinvestors.com . Accessed 24 Feb. 2025.
3. Reddick, Chris. “How to Effectively Save for Retirement in FedEx Companies.” Chris Reddick Financial Planning, LLC, chrisreddickfp.com . Accessed 24 Feb. 2025.
4. Firm Pavilion. “The Secrets Behind FedEx Success: Unveiling the Strategies of the World's Most Influential Companies.” Firm Pavilion, firmpavilion.com . Accessed 24 Feb. 2025.
5. Morgan Stanley. “Our Firm-Wide Capabilities.” Morgan Stanley at Work, morganstanley.com . Accessed 24 Feb. 2025.
What are the implications of the Funding Target Attainment Percentage for FedEx Corporation employees, and how does it impact the security of the pension benefits offered by FedEx Corporation? This question seeks to explore the nuances of the funding target attainment percentage as reported in the annual funding notice, examining how this metric not only reflects the financial health of FedEx Corporation's pension plan but also how it affects employee confidence in future benefit payments and retirement planning.
Funding Target Attainment Percentage: The Funding Target Attainment Percentage for FedEx Corporation indicates the degree to which the pension plan is funded. A percentage of 101.33% for 2022 suggests that the plan has sufficient assets to cover its liabilities, providing security for employees' pension benefits. This high percentage likely increases employee confidence in the stability and reliability of their future pension payouts, essential for long-term retirement planning.
How does the merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan influence the benefits currently available to FedEx Corporation employees? This question aims to delve into the practical changes that may arise due to this merger, assessing whether it aligns with employee expectations regarding their pension benefits and how the transition process is managed by FedEx Corporation.
Merger of Pension Plans: The merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan appears to have been strategically managed to maintain benefit stability. Despite increasing liabilities by 5.3%, the merger was structured to ensure no negative impact on the benefit amounts payable to participants from either plan, preserving the expected pension benefits for all affected FedEx Corporation employees.
In terms of investment strategies, what measures does FedEx Corporation implement to ensure that its pension plan investments align with the long-term liabilities expected to be paid out to retirees? This question encourages an exploration of the investment policies in place, examining the asset allocations and risk management strategies that FedEx Corporation employs to ensure sustainable funding for its pension obligations, which could potentially include detailed analyses of stocks, debts, and alternative investments.
Investment Strategies: FedEx Corporation employs a diversified investment strategy across equities, fixed income, and alternative investments, aiming to meet long-term pension liabilities. This approach, which includes both active management strategies and the limited use of derivatives, is designed to generate returns that exceed market indices, thus ensuring adequate funding of pension obligations.
What options do employees of FedEx Corporation have for accessing their pension plan statements, and how frequently are these statements generated? The focus here is to understand the communication strategies employed by FedEx Corporation regarding pension benefit statements, including technological access points and the importance of these documents for employee financial planning.
Pension Plan Statements: FedEx Corporation provides annual pension plan statements through their Retirement Service Center, available electronically each fall. Employees can access their statements online or request them if notifications are not received, ensuring transparency and aiding in personal financial planning.
How are contributions to the FedEx Corporation Employees’ Pension Plan determined, and what role do excess contributions play in the plan's overall funding strategy? This question aims to educate employees about how the company balances mandatory contribution levels with potential excess contributions, exploring how these factors interact to influence the plan's solvency and employee benefits.
Contributions to the Pension Plan: Contributions to the FedEx Corporation Employees' Pension Plan are calculated to meet at least the minimum legal requirement and potentially include voluntary excess contributions. These excess contributions can help manage the plan's funding level and ensure its solvency, benefiting overall pension security for employees.
What types of benefits are guaranteed under the Pension Benefit Guaranty Corporation (PBGC) for FedEx Corporation employees, and what limitations exist that employees should be aware of? By focusing on the guaranteed benefits, this question prompts a discussion on the security of specific benefits provided by FedEx Corporation and highlights limitations, allowing employees to understand their rights fully.
PBGC Guarantee: The Pension Benefit Guaranty Corporation guarantees certain types of benefits for FedEx Corporation employees, such as pension benefits at normal retirement age and most early retirement benefits. However, there are limitations, such as exclusions for benefits without vested rights and recently increased benefits, which employees should be aware of to fully understand their pension security.
In what ways does the FedEx Corporation plan to adjust its pension funding strategy in light of changing federal laws that impact pension obligations? Employees are encouraged to consider how legislative changes influence corporate policies surrounding retirement benefits and the proactive strategies FedEx Corporation might take to remain compliant while ensuring the security of employee pensions.
Adjustments to Funding Strategy: FedEx Corporation is likely to adjust its pension funding strategy in response to legislative changes affecting pension obligations, such as those introduced by recent acts adjusting how pension liabilities are calculated. This proactive approach aims to ensure compliance with new laws while continuing to secure the financial health of the pension plan.
What are the steps that FedEx Corporation employees must take if they are considering retirement, particularly in how to navigate the pension plan and gain access to their benefits? This question aims to provide clarity on the retirement process, ensuring that employees are equipped with the necessary information regarding required documentation, timelines, and points of contact within FedEx Corporation.
Steps for Retirement Planning: Employees considering retirement should contact the FedEx Retirement Service Center to navigate their pension plan benefits. This process involves understanding necessary documentation, timelines, and available support, facilitating a smooth transition into retirement.
How does FedEx Corporation plan to manage potential funding shortfalls in the pension plan, and what mechanisms are in place for notifying plan participants should such an event occur? Employees would need to understand the proactive measures put in place by FedEx Corporation to address funding-related challenges while also knowing what this means for their benefits.
Managing Funding Shortfalls: In the event of potential funding shortfalls, FedEx Corporation has policies in place to manage such situations, including strategic contributions to mitigate shortfalls. The company maintains transparency with plan participants about funding levels and any significant changes affecting the pension plan.
For those seeking more information about their pensions and retirement options, how can FedEx Corporation employees contact relevant departments, and what resources are available for assistance? This question provides an opportunity for employees to familiarize themselves with contact points such as the FedEx Retirement Service Center, emphasizing the importance of open communication channels for addressing inquiries related to their pensions. Feel free to consult the provided document for more in-depth exploration of these topics.
Contacting for Pension Information: FedEx Corporation employees seeking more information about their pensions or retirement options can contact the FedEx Retirement Service Center. This center provides essential resources and support, ensuring employees have access to all necessary information regarding their retirement planning.
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