Tag Archives: equity

Adding Up the 401(k) Savings

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Much of the discussion around retirements is rightfully focused on the large numbers of people who are not saving enough. But The Washington Post recently shared some positive information:

The number of workers with $1 million or more in their 401(k) increased to 157,000 at the end of the first quarter this year, an increase of 45 percent compared with the same time a year earlier, according to Fidelity Investments, one of the country’s largest administrators of workplace retirement accounts.

“There’s no doubt that many of Fidelity’s 401(k) millionaires have benefited from the market’s positive performance, but they also exhibit many of the behaviors we recommend to make the most of your savings,” said Jeanne Thompson, senior vice president for Fidelity. “They contribute enough to get their full company match, they’re less likely to take 401(k) loans, they don’t cash out when changing jobs and they invest for growth — on average, 401(k) millionaires hold 76 percent of their savings in equity mutual funds.”

Workers can now contribute up to $18,500 each year to a workplace plan such as a 401(k) or the federal government’s Thrift Savings Plan (TSP). If you’re over 50, there’s a catch-up provision that allows you to contribute up to $24,000 to an employer-sponsored retirement plan.

Fidelity’s analysis of first quarter data also found the following.

  • Workers who have saved in their company’s 401(k) for 10 years had a record high average account balance of $290,100, compared with $250,500 a year ago.
  • Those employees who have saved for 15 years had an average balance of $379,600, up from $330,200 a year ago.

“Although found at many grade levels and in nearly every agency throughout the country, all of the people in the million-plus column have the same things in common: they have invested for the long haul, and invested heavily or exclusively in the stock-indexed C and S funds,” Mike Causey of Federal News Radio wrote. “When markets drop dramatically — as they did in 1997 and during the Great Recession — they continue to purchase stocks getting more shares each pay period because they are investing the same amount of money, which purchases a larger share of the C and S funds. Also, all of those eligible for it have taken advantage of the total 5 percent match available from their agency.”

Tech Talk: Compiling the Equity Crowdfunding Numbers

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Many are familiar with crowdfunding, with a version of that – equity crowdfunding – formalized with the Jumpstart Our Business Startups Acts (Jobs Act). Equity crowdfunding is defined as the “process whereby an entrepreneur, start-up or established business raises funds over the internet by offering and selling securities in exchange for an investment (stock, debt, revenue-sharing agreements, etc.) in their company.”

Here are some numbers regarding the progress since this portion of the Jobs Act went into effect in May 2016. For the first 100 equity crowdfunding campaigns:

  • Approximately 33% of companies were mobile app/internet services companies
  • Approximately 12% were consumer gadget companies
  • Approximately 60% were in business one year or less
  • A majority of companies was pre-revenue stage with a valuation of between $1.5 million and $4 million

A separate analysis of year one (May 2016 to May 2017) found:

  • Approximately 88% of filings were made by firms that were five years or younger
  • Approximately one-third of firms were six months or younger when they launched their crowdfunding campaign
  • Nearly 50% of firms were located in California, Florida or Texas
  • A total of 326 companies filed offerings during that span, including 17 businesses that conducted more than one crowdfunding campaign
  • The 326 companies employed a total of 1,574 employees (approximately five employees per firm)

Finally, a January 2018 summary from Crowdfunding Insider reports:

  • As of today, more than $100 million in capital commitments
  • 731 campaigns
  • 100,901 investors
  • Average is $992 per investment (up from $750 when the industry started)
  • Average raise is $360,691 (up from $250,000 when the industry started)
  • Total jobs supported is 3,608
  • It took 410 days for the industry to break $50 million and 209 days (50% less time) for the industry to raise the next $50 million

INVESTIndiana Returns Sept. 23

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Leading Indiana companies will participate in the fourth INVESTIndiana Equity Conference on September 23 at the Conrad Indianapolis.

Fund managers, analysts and institutional investors are primary attendees, with the event open to others in the business community. An Executive Roundtable opens the day. The keynote speaker is William Testa of the Federal Reserve Bank of Chicago. Twelve companies, including six financial institutions, are scheduled to make presentations.

They cover the state, including 1st Source Corporation (South Bend), Escalade (Evansville), Hillenbrand (Batesville) and nine others. Full information and registration is available online.