The MaineSTART Difference
Once you recognize the need and value of saving for
retirement in a systematic, tax-deferred plan, you can be
bombarded with decisions that make it hard to follow
through. That's where MaineSTART comes in.
At MainePERS, we've done the hard work to make saving
simple, effective, and affordable. After thorough research,
we have assembled a program to meet your needs.
High fees charged by mutual fund managers can impose a heavy
drag on investment results. Many funds offered in the market
today impose fees well in excess of 1% of your investment.
Investment management fees, transaction fees, administration
fees, marketing fees, and other, sometimes hidden, fees can
drive up costs, and since the average mutual fund will
provide a return just equal to the overall market over time,
each of these fees and transaction costs will reduce your
return to below the average. Clearly, minimizing cost is an
important part of achieving satisfactory investment results.
MainePERS has chosen to offer index funds from a highly
regarded nonprofit fund management company in order to
minimize costs to you. These funds are among the lowest cost
in the industry. They do not have marketing or distribution
fees associated with them, and they do not share revenue
with DC plan administrators. There are no upfront sales
charges or back end redemption fees (with the exception of
an early redemption fee for the international fund), both of
which are typical in the universe of mutual funds, and which
can cost as much as 5% or more of your assets and are not
included in the stated expense ratio or management fee.
There are no hidden fees. In addition, transaction costs are
minimized in index funds, further limiting costs to you.
MaineSTART makes it easy to enroll, make, or change your
investment choices, and view your progress. Call
888-401-5629. or log on to
Newport Group any time, 24/7. Because MaineSTART works
through payroll deduction, you can make systematic savings a
simple and powerful tool in your long-term financial plan.
Your Asset Allocation
Asset allocation refers to the proportions of your savings
that are invested in different types of investments: for
example, U.S. stocks, foreign stocks, Treasury bonds, real
estate, etc. Studies have shown that your asset allocation
will play a far greater role in your success than the
specific funds you choose.
Investments in Bonds and Money-market Funds
For most savers, the greatest opportunity for long-term
returns comes from investing in stocks, and the greatest
stability comes from investments in bonds and money-market
funds. Finding the right mix depends on when you need the
funds to be available your time horizon and your ability to
tolerate risk. Maintaining the right mix involves revisiting
those factors every so often, and rebalancing your
investments (because different investments grow at different
rates) to return to the right allocation.
Professional Investment Managers
For savers who want the
benefit of professional investment managers making these
asset allocation decisions for them, MaineSTART offers a
selection of so-called lifecycle or target retirement date
mutual funds. These funds relieve you of the burden of asset
allocation, rebalancing, and fund selection by basing your
investment on a retirement date of your choice. After you
select the fund that most closely matches your planned
retirement, a professional money manager then chooses an
asset allocation in the early years that assumes greater
risk, changing the allocation over time to reduce risk as
your target retirement date nears. For the vast majority of
our participants, we think this is the most appropriate
investment vehicle for their retirement savings.
Balanced Option Fund
For participants who want the benefit
of professional management, but want to have a constant
asset allocation, MaineSTART offers a balanced option fund.
A balanced fund is a fairly stable mix of stocks and bonds,
and may be appropriate for those with slightly higher risk
tolerances. Keep in mind that the risk level of this fund is
not designed to decline as you near retirement.
Broad Market Index Funds
Finally, for savers who want to
customize and control their asset allocation, MaineSTART
offers an array of broad market index funds. These funds
help you with the allocation process by greatly simplifying
it. The key decision is how much you want to invest in each
type of asset. By using broad market funds, the participant
can be assured they are getting appropriate diversification
within each asset type, an important quality for any
portfolio. While participants are free to use these funds
either by themselves or in conjunction with the other
options, this option is most appropriate for those well
versed in finance and portfolio construction.
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