INVESTOR GUIDE. Understand your investment options with Savings Plus

Transcription

1 INVESTOR GUIDE Understand your investment options with Savings Plus

2 Invest in your future As a participant in Savings Plus, you are both a saver and an investor. Every investor is different. Therefore, Savings Plus offers an array of options to serve your individual preferences. There are a variety of ways to invest. It is important to carefully consider both your financial future and the types of contributions you make now. In this guide, you will find a general overview of your options. Understand the differences between pre-tax and Roth (after-tax) contributions Through Savings Plus, you can contribute to either the 4(k) Plan, the 457 Plan, or both, and contributions can be made on a pre-tax and/or Roth basis. Pre-tax contributions come out of your pay before most taxes are deducted, lowering your taxable income. Any potential earnings on your savings grow tax-deferred until they are withdrawn. Roth contributions come out of your pay after taxes are deducted. Although Roth contributions do not reduce your current taxable income, your contributions and related earnings may be withdrawn tax-free at retirement, provided you meet certain criteria. For tax-free withdrawals, the withdrawal must be made on account of your death, disability or attainment of age 59½ and the withdrawal must be made 5 years or more after January of the first year in which you made a Roth contribution. To determine which is right for you, visit About Savings Plus at savingsplusnow.com. A Plan Comparison Chart is also available to help you decide. Not sure where to start? Use My Interactive Retirement Planner SM, an interactive tool on savingsplusnow.com, that can help you evaluate and project your potential retirement savings.

3 Multiple investment approaches are available You have a wide range of investment approaches available through Savings Plus. This gives you the ability to select an approach that fits your needs and comfort with investing. Do it for me investing For investors who prefer a less hands-on investing experience, Savings Plus offers Target Date Funds and a fee-based managed account service. Target Date Funds offer the convenience of a single, diversified investment strategy that automatically becomes more conservative as the fund approaches a specific retirement date. This date is selected in alignment with your date of birth. Nationwide ProAccount is a fee-based managed account service that creates and maintains a personalized retirement investment strategy. Both the Target Date Funds and Nationwide ProAccount are comprised of the Savings Plus core investment funds, Savings Plus investment line-up featuring a broad range of asset classes with differing levels of risk/reward potential. Target Date Funds invest in a wide variety of underlying funds to help reduce investment risk. So, in addition to the expenses of the Target Date Funds, you pay a proportionate share of the expenses of the underlying funds. Target Maturity Funds are designed for people who plan to withdraw funds during or near a specific year. Like other funds, target date funds are subject to market risk and loss. Loss of principal can occur at any time, including before, at or after the target date. There is no guarantee that target date funds will provide enough income for retirement. Do it myself investing Savings Plus allows you to build and manage a customized portfolio by using the Savings Plus core investment funds. This brochure provides a tool which can help identify your risk tolerance and investment approach. Another available option is the Personal Choice Retirement Account (PCRA), which is a Self-Directed Brokerage Account (SDBA), administered by Charles Schwab & Co. The benefit of this option is that it allows you the freedom to select and manage your portfolio from a much larger variety of investment choices, as long as you maintain a minimum balance in the Savings Plus core investment funds. Guided investing If you prefer a hands-on approach but also want help when you need it, use our free Online Advice Tool to create a more guided investment strategy. Once your strategy is in place, you can manage your account and implement or modify the recommendations provided. If you choose this investment method, remember to check in regularly with your Retirement Specialist to ensure your investing style is accurate and you are on track to reach your savings goals.

4 What type of investor are you? Investor personality assessment As just discussed, most people who participate in a retirement savings plan fall into one of three investor personalities: The do it for me investor typically does not have the time or knowledge to manage their investments and prefers a fund or professionally managed service which periodically resets asset mix according to a selected date that the investor anticipates taking a distribution from the account. The do it myself investor generally has the time and knowledge to build and maintain their own portfolio with little assistance. The guided investor still wants to go it on their own, but also wants help when they need it. Answer these five short questions to assess your investor personality. A. Take the assessment To assess which tools can best help you manage your savings, you will need to know your investor personality. If you are unsure about your investor personality, the following quiz can help. Write your scores for each question in the right-hand column. Remember, your assessment should only be used as suggested guidance.. How would you rate your knowledge of the following investing concepts? Asset allocation Investment risk Excellent Average Poor None Score. How often do you perform the following tasks in your 4(k) and/or 457 account(s)? Check your 4(k)/457 balance(s) Change the investments in your 4(k)/457 account(s) Weekly Monthly Quarterly Yearly. How confident are you that you understand the following aspects of your 4(k) and/or 457 account(s)? Investment choices Retirement income and savings rate projection tools Very Mostly Not Very Not at all 4. How confident are you about your ability to: Choose the right investments Forecast your income needs in retirement Very Mostly Not Very Not at all 5. In the past, how satisfied have you been in your ability to: Choose the right investments Know the right time to make changes to your portfolio Very Mostly Not Very Not at all Total score 4

5 B. What your results mean Total score Likely investing personality Suggested investment service Under 5 Do it for me 5 to 4 Guided Consider using the Savings Plus core investment funds with guidance from Online Advice. See page. Do it myself Consider using the Savings Plus core investment funds and possibly opening a Personal Choice Retirement Account (PCRA) for more choices. See page 8. 5 or more Consider using a Target Date Fund or enrolling in the Professional Management program. See page 6. 5

6 Do it for me investing A great option for investors who want the most help possible managing their investments Target Date Funds Each Target Date Fund offers a diversified mix of investments that becomes more conservative as the fund approaches a specific target date. Instead of choosing a fund based on risk (such as conservative or aggressive), you choose one fund based on the time frame in which you expect to begin taking distributions from your account. If you do not select how you want your contributions invested when you first enroll, your contributions will post to the Target Date Fund that most closely aligns with your date of birth. If you were born between You might choose this fund (assumes taking a distribution at age 6) 95 or earlier Target Date Fund Income Target Date Fund Target Date Fund Target Date Fund Target Date Fund Target Date Fund Target Date Fund Target Date Fund Target Date Fund Target Date Fund Target Date Fund 6 6

7 Professional Management Investment professionals create and maintain a personalized retirement strategy for your account using the Savings Plus core investment fund lineup when you enroll in Nationwide ProAccount, the Professional Management program offered through Nationwide. Nationwide ProAccount charges a management fee for this service. For professional management services, Savings Plus has arranged for an annual fee of.5% for account assets up to $5,. Program fees thereafter are as follows: The next $5,.45% fee assessed The next $,.4% fee assessed $5, and above.5% fee assessed For example, the fee assessed on an account with an average balance of $, would be $5 per year or $.5 charged on a quarterly basis. To enroll in the Nationwide ProAccount Professional Management program, or get additional information, call our Service Center. Nationwide ProAccount will send you a personalized plan, help you put your plan into action and routinely monitor your account. You can cancel anytime without penalty. 7

8 Do it yourself investing An option for investors who want to fully manage their investments Do it myself investing There are two ways to build and manage a customized portfolio through an account with Savings Plus.. You can select funds from the list of Savings Plus core investment funds that cover a broad range of asset classes with different risk/reward potential.. You can invest through the Schwab Personal Choice Retirement Account (PCRA), a Self-Directed Brokerage Option. The PCRA provides greater flexibility by allowing you the freedom to select and manage your portfolio from a much larger array of investments that include mutual funds, individual stocks and bonds and a variety of other options. Additional transaction fees may apply. Contact Schwab for details regarding its PCRA Fee Schedule. You must maintain a minimum balance of $,5 or 5% of your account, whichever is less, in the Savings Plus core investment funds. Savings Plus investment choices are featured below. For more details about these funds, view the Fund Fact Sheets on savingsplusnow.com. Savings Plus offers a diverse lineup of investment choices from which to build your portfolio. You can choose a single Target Date Fund, which automatically becomes more conservative as you approach a specific target date, or build your own portfolio using the core investment fund lineup. For more information, visit savingsplusnow.com. The funds are listed in order of level of risk, as measured by standard deviation. Past performance does not indicate future performance. Managed Funds (Active Management) Short-Term Investments Short Term Investment Fund Cash Short Term Investment Fund Bonds Bond Fund Diversified Real Return Diversified Real Return Fund Balanced Fund Socially Responsible Fund Stocks Large Cap Fund Mid Cap Fund International Fund Small Cap Fund Core Investment Funds Index Funds (Passive Management) Bond Index Fund Large Cap Index Fund Mid Cap Index Fund International Index Fund Small Cap Index Fund Redemption Fees may apply upon withdrawal. See savingsplusnow.com. Target Date Funds Target Date Fund Income Target Date Fund 5 Target Date Fund Target Date Fund 5 Target Date Fund Target Date Fund 5 Target Date Fund 4 Target Date Fund 45 Target Date Fund 5 Target Date Fund 55 Target Date Fund 6 8

9 What is the difference between active and passive management? Actively managed funds are managed by an individual or management team. Passively managed funds have portfolios that mirror components of a market index. Passive managers try to match the performance of a corresponding index. The importance of diversification Diversification means allocating your money across several different asset categories which may help limit your risk. If your investments are diversified, your account is less likely to be hurt by the poor performance of any one single investment. You may achieve a diversified investment mix simply by choosing a Target Date Fund, or by building your own investment mix from the Savings Plus core investment funds. If you build your own mix, your allocation should generally be based upon your overall investment goals, time horizon and risk tolerance. As these change, you may need to modify your investment allocation accordingly. Use the following questionnaire to learn more about your personal investment style. 9

10 Making the best asset allocation decision for you depends on knowing who you are as an investor and what options are available to balance your preferences with your goals. The following two steps provide the information you need to help make your investment decisions. Once you have completed these steps, the core investment options that are available will be presented. Step : Find your personal investing style Wilshire Associates (Wilshire), a global independent investment consulting firm, developed the Risk Tolerance Questionnaire and the related fund allocations. Answer the following questions to determine your personal tolerance for risk. Choose the answer that is right for you and enter the associated point value in the box provided. Time horizon questions. Your current age is: A. Over 7... point B points C points D points E. 4 or younger...6 points Score. When do you anticipate taking regular cash distributions from your account? A. Less than 5 years... points B. 5 9 years...5 points C. 5 years...7 points D. More than 5 years, or I do not anticipate taking cash distributions... points Score. In addition to your 4(k) or similar retirement plan, does your employer actively sponsor other retirement plan benefits such as a defined benefit pension or defined contribution profit-sharing plan that are available to the majority of current employees? A. No... points B. Yes... points Score

11 Risk tolerance questions 4. Your risk tolerance describes your willingness to accept fluctuations in your account value in order to achieve the long-term objective of your retirement savings. Which statement best describes your tolerance for risk? A. Avoiding loss in my account value is more important to me than experiencing long-term growth point B. I desire long-term growth of my account value, but I am more concerned with avoiding losses...4 points C. I am concerned with avoiding losses, but this is outweighed by my desire to achieve long-term growth... 7 points D. To maximize the chance of experiencing high long-term growth, I am willing to accept losses... points Score 5. While riskier than bond investments, stock investments offer the potential of higher long-term investment returns. What is your feeling about investing a portion of your money in stock investments? A. I am concerned that stock investments are too risky and would prefer a higher allocation to bonds... point B. I understand there is additional risk with stock investments and would consider a more balanced allocation to stocks and bonds...5 points C. I understand there may be some additional risks in stock investing, but the opportunity to achieve long-term growth with a higher allocation to equities is worth serious consideration...9 points D. I understand the risks, but recognize there are growth opportunities in stock markets, and would like to maximize those opportunities... points Score 6. Given the volatility of the capital markets, your account value will fluctuate over time. The three choices below show potential account value ranges after a three year investment period. If you were to invest $5,, which portfolio would you select? A. Account value range of $48, $5,... points B. Account value range of $45, $58,...6 points C. Account value range of $4, $6,... points Score Choice A Choice B Choice C $6, $5, $58, $48, $45, $5, $4,

12 Using the point values from the six questions on the previous page, enter your total points below. Using this number, you can determine the portfolio assignment appropriate for your personal preference to risk. Total points Your total points align with Portfolio Assignments as follows: Step : Identify your profile Points Total Portfolio Assignment 7 Conservative 8 6 Conservative Growth 7 6 Moderate Conservative 7 9 Moderate 4 57 Moderate Aggressive Aggressive Growth Choose your funds Now that you have identified your personal investing style, it is time to select the funds that most closely match that style. The following table provides the suggested fund allocations based upon your score and portfolio assignment. Put a check mark in the box below that best represents your Portfolio Assignment. Conservative Conservative Growth Moderate Conservative Moderate Moderate Aggressive Aggressive Growth Short Term 9% 4% % 4% 9% 4% Bond 66% 56% 44% 6% 6% 6% Large Cap % % 9% 8% 9% 5% Mid Cap % % % 9% 7% % International % 8% % 9% 4% % Small Cap % % 4% 4% 5% 5% Total % % % % % % Conservative Conservative Growth Moderate Conservative Moderate Moderate Aggressive Aggressive Growth Now that you know your investor style, you can select your funds. Refer to the core investment funds listing on page 8 to select the funds that most correspond to your investor risk-tolerance score.

13 Guided investing A flexible option for investors who would like to be active in the investment process, but with guidance If you invest in any of the Savings Plus core investment funds, you can manage your account with online help at no additional cost to you. The Online Advice Tool, offered through Wilshire, provides advice on what investments to choose based on your input. You can then decide to implement or modify the recommendations provided. Remember to check in regularly to make sure you are on track to reach your retirement savings. Visit the Investment Information section of savingsplusnow.com to start this process.

14 Maintain your Savings Plus account Now that you have determined your investor style and learned about your investment options, here are some tips to remember:. Reaching your retirement goals takes time. By investing consistently, you let time work to your advantage.. Markets and investment objectives can change. Review your investment strategy often to make sure it still fits your goals.. The more you earn, the more you may want to save. You may want to consider increasing your Savings Plan contribution when your salary increases. 4. It could be advantageous to consolidate your assets. Consider consolidating your previous employer s retirement plan assets into your Savings Plus account. 5. You are saving for your future. Saving now may assist you in meeting your retirement goals. Free one-on-one planning support Savings Plus offers a comprehensive suite of support and services to help you manage your account. We provide, at no cost to you, one-on-one support with our licensed and noncommissioned Retirement Specialists who are available throughout the state to help you plan for retirement and to work with you throughout your retirement. Visit savingsplusnow.com for more information. How to reach us Savings Plus Walk-in Center: 8 6th Street, Room 8 Sacramento, CA a.m. - 5 p.m. Savings Plus Service Center: a.m. - 8 p.m. Website: savingsplusnow.com 4

15 Visit savingsplusnow.com or call to access all the tools and resources available through Savings Plus. 5

16 Please consider the fund s investment objectives, risks, and charges and expenses carefully before investing. The Fund Fact Sheets contain this and other important information about the investment company. Fund Fact Sheets are available on the website or by calling Read the Fund Fact Sheets carefully before investing. Information provided by Retirement Planning Specialists is for educational purposes only and is not intended as investment advice. Investing involves market risk, including possible loss of principal. Actual investment results will vary depending on your investment and market experience, and there is no guarantee that fund objectives will be met. Investment advice for Nationwide ProAccount is provided to plan participants by Nationwide Investment Advisors, LLC (NIA), an SEC-registered investment adviser. NIA has hired Wilshire Associates Incorporated ( Wilshire ) as the Independent Financial Expert for Nationwide ProAccount. Wilshire is a service mark of Wilshire Associates, Inc., which is not affiliated with NIA or any Nationwide affiliate. Nationwide representatives are Registered Representatives of Nationwide Investment Services Corporation, member FINRA. Nationwide Retirement Specialists cannot offer investment, tax or legal advice. You should consult your own counsel before making retirement plan decisions. Nationwide, Nationwide ProAccount and My Interactive Retirement Planner are service marks of Nationwide Mutual Insurance Company. 6 Nationwide NRM-4CA-CA (/6)