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- [00:03]
A
Are you a 401k champion to your friends and colleagues and what's really in your value fund? That and more on this Saturday personal finance edition of the Motley Fool Hidden Gems Investing podcast. I'm Robert Brockamp, and this week I speak with financial advisor Julie Jason, the creator of the 401k champion award that recognizes people who serve as role models, educators and mentors in the workplace when it comes to saving for retirement. But first, some items that caught my eye over the past week or so. You know when you think of value stocks, what kind of companies come to mind? If visions of stodgy, slower growth firms dance in your head, then you may be surprised to know that value stocks are actually outperforming the S&P 500 so far this year and over the trailing 12 months at least, as measured by the Vanguard Value ETF Ticker VTV, the largest value ETF in the U.S. it's up 16% so far in 2026 as of this taping on Friday morning, compared to 8% for the S&P 500. And it's up 29% over the past year, versus 22% for the S&P 500. Given all the hullabloo about AI and tech stocks, how can value stocks be doing so well? Look under the hood and you'll see the answer. The top holding in The Vanguard Value ETF is Micron Technology, which is up 854% over the past year. Also in the top 10 holdings are Cisco and Intel, up 77% and 499% respectively. Over the trailing 12 months, you'll find those same stocks in the top 10 holdings of another popular value index ETF, the iShares Russell 1000 Value ETF Ticker IWD, but it also includes Alphabet, which is up 102% over the past year. Recent report from Schroder's Investment Management cited evidence that value stocks can actually be a good hedge against AI risk without sacrificing equity exposure. But the report also cautions that a passive value index fund may not fit the bill, since many of the prominent value indexes have significant exposure to the Magnificent Seven and or other technology companies, as we've just seen. So you might have to dig a little deeper to find true value stocks these days. Our next item comes from a CNBC article by Annie Nova, which highlights a recent announcement from the Department of Education. Student loan borrowers who sign up for autopay will receive a 1 percentage point discount on their interest rates starting July 1, up from the current 0.25% discount. According to the article, only 40% of student loan borrowers are enrolled in autopay, down from more than 80% before the pandemic. Borrowers need to sign up by September 30, and the discount will last through June of 2028. It likely won't result in an enormous savings, but you know, every little bit helps. Around 42 million Americans hold federal student loans nowadays, owing more than $1.6 trillion, exceeding the $1.1 trillion Americans owe on credit cards. And now the number of the week, which is 6.6%. That is the median amount that workers are contributing to 401ks, administered by Vanguard, according to the firm's latest How America Saves report. Throw in employer contributions and the median contribution rate is 11.6%. That number has slowly crept up over the past five years or so, but it is still below the 15% savings rate that many experts recommend. A few other interesting stats from the report 14% of workers contribute the maximum to their accounts, 17% of workers age 50 and older are making catch up contributions and 18% of workers are contributing to Roth accounts, which frankly to me seems a little low. More workers should probably be putting at least some of their 401 money into Roths. Do you have above average knowledge about 401 s and have you ever shared it with your colleagues? That's our next topic of conversation when Motley Fool Hidden Gems Investing continues.
- [04:00]
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Support for the show comes from Fundrise. For the past 70 years there's been a room in finance most people couldn't enter. A room where you could have invested in some of the biggest names in tech companies like Airbnb and Uber before their multi billion dollar IPOs. I'm talking about venture capital. Fundrise recently took a sledgehammer to those closed doors by launching a venture capital product that's available to anyone. Their mission is to give everyone the chance to invest in the best tech and AI companies before they go public. You can visit fundrise.com fool to check out Fundrise's venture portfolio and get in early today. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. This is a paid advertisement.
- [04:44]
A
Primary way that Americans save for retirement is through a work sponsored plan such as a 401k and most of the education about that plan comes from the employer or the plan provider. But it doesn't have to be that way. You yourself could be a source of knowledge and encouragement to your colleagues, friends and relatives. Here to explain how is Julie Jason, the founder and CEO of Jackson Grant Investment Advisors and the creator of the annual 401k champion award. Julie, welcome to the show.
- [05:09]
C
Well, thank you, Robert. And by the way, everyone has to know that you are a 401 champion.
- [05:15]
A
Thank you. Yes, I was very honored to receive the award in 2021. And maybe we'll get to that story here later in the show. But let's start by you telling us about the inspiration behind the 401k champion award.
- [05:27]
C
I have a short story and I have a long story. So let me, let me tell you what triggered my interest in 401ks first, which will give you a little bit of background on why we went in this direction. So, a long time ago, I had a client who was not participating in his 401k, and yet there was a match on the 401k. And so we had a long conversation about how if you invest on your own outside of the 401k, it's going to take you much longer to build wealth within your 401k, especially with the dollar for dollar match, you have immediate compounding so you don't have to wait. Time is the element there. And that led me to go to the local bookstore to look for a book on 401ks that I could give him. There was no bookstore? No, there was a bookstore, but there was no book on 401 s in the bookstore. So that'll tell you how long this was. So it was in the 90s, I took it upon myself to write a book for 401k participants about how to think of the 401k as an investment alternative, not just another benefit plan. And that led to my really taking a dive into how 401ks work. And that led to another book for 401k sponsors. After doing you and your 401k. All right, so that's the background. Over the years, I followed education, 401k education. And what I found was it wasn't doing a good job. In other words, your standard 401k education wasn't good enough for me. And during this journey, I became an advocate for financial literacy education. But the most important element of financial literacy education is to take a look at what your options are and maximize those that give you the biggest bang for the buck. And in terms of time, because time is the element that really drives investment success. So given all that, then I looked for, how do you really think of educating a 401k eligible person who hasn't taken the time to really study. And it can be daunting to try to figure out how a 401k works. So just in a brainstorming session with a coworker, we came up with this concept of, hey, why don't we do a contest at the participant level so that participants can talk to each other and just bring everything down to grassroots communication instead of someone sitting at the top trying to teach you on how to use your 401k. So that's the long story, but it was a wonderful journey and I think it's very valuable that now we have a Mechanism to reach 401 participants who can then tell their story about why they love their 401s. And what that does is it leads to more conversations on a peer to peer level. And I really think that that can be a big breaking through moment. We need more people to learn about this contest and it is 100% pro bono. There is no fee of any sort. And we really want to see if we can bring this into individual 401 sponsors as well so that they can sponsor their own 401 contestants of this type.
- [08:43]
A
Whenever I meet someone who is about to retire or has retired, I'll often ask them, you know, how did you do it? What was the secret to your success? And over and over again, many people will tell me. At some point when I was younger, someone told me, a colleague, a friend asked like, hey, have you signed up for the 401k yet? Oh, you haven't? You better do that. Oh, or how much are you saving? Well, I'm just saving 3%. Well, you probably should be saving more. That term you use, grassroots. That's sort of like other people telling you, not just the person at the top, but other people telling you this is the smart thing to do. It really has a huge benefit on people.
- [09:18]
C
You know, that's interesting that you say that because when we started the contest, one of the things that surprised us was how important the mentor was in the equation. And it is exactly what you're talking about. And you know what? I didn't see that in the educational literature. I did not see anyone talking about the importance of mentorship. But that's what this contest does. It just brings out, you know, how do you learn about these things? Someone has to tell you, you're not going to jump in and start reading 401k materials unless you know why you should.
- [09:51]
A
Have you come across anything that has surprised you since you've been giving out this award and you've been doing it since 2019. And maybe it surprised you, either because it was unique or maybe just a little offbeat.
- [10:01]
C
The biggest surprise was what we just talked about, the fact that the literature doesn't mention mentorship. I think as someone who is a financial literacy proponent, what I found surprising was how important it was for the individuals who were actually applying for the award to be the 401 champion. How they all focused on their mentors. Someone guided them to not only Enroll in their 401s, but also to learn how to maximize their 400 101ks and maximize. What I mean by that is to look at the match, if there is a match, or the company contribution, and figure out how can I make the most of that contribution. And that takes a little studying. So the next level of the surprise is people talking to each other at work over lunch about, do you know how to maximize the 401k? And it just opens up the dialogue at a very natural level where there's no exam that's coming up. And one of the things I have found in 401k education is that when someone's giving a presentation in the front of the room, it feels like you're in school. It feels like you're going to have a test. And you know what you may or may not remember, and it may or may not apply to your particular situation. So I really, really like taking this dialogue down to employee and employee. The conversation is not going to be anything about how to invest or anything that leads to a potential issue. It all has to do with, are you taking advantage? And here's how I took advantage.
- [11:40]
A
Yeah, that's a great way to put it. You definitely don't want to be in this position offering personalized investment advice to your colleagues, but explaining what you've done, where you've, you've learned things, books you've read, maybe websites you use, that all can be helpful information to someone. So that's what some colleagues could do for you to a certain degree. It starts with the employer. What can employers be doing to increase 401k participation and maybe just overall retirement preparedness?
- [12:07]
C
In my experience, watching 401 sponsors, I can tell you that I see differences. And some companies actually do have a mission of 401 education through a broader sort of label under financial literacy. I love seeing companies that come out and say something about how much they love financial literacy education. And what that does is it opens up groups within the company that have common interests and can come together to talk about credit cards or how to get a mortgage or how to invest appropriately within a 401k, or how to maximize contributions. Or the one that I really, really love is how to manage your W4. And I want to talk about that a little bit because the companies that can help employees manage their W4s are really doing them a favor. And I'm talking about the employee who is eligible but is not participating because he's afraid of not having enough money in the paycheck. And I'll just give you one example where there can be such huge impact. Take an employee who has a W4 that over withholds, meaning more money is taken out of the paycheck to go to the U.S. treasury. And then at the beginning of the next year, the employee gets back a refund. That is the worst situation for a participant or a non participant to be in. And the company can help educate that employee on how to change this W4 withholding in order to avoid sending money to the treasury too early, giving the government a loan, and instead using that to keep your paycheck about the same. But that employee can then use that extra money in the paycheck to contribute to the 401k. So instead of sending money to the government, you're sending money to the 401k. Yes, you don't get the refund. But look, especially in a 401k that has a dollar for dollar match or 50 cents per dollar match, or really any kind of match, you have a huge benefit there for you. And yes, it takes a little thoughtfulness, it takes a little thinking, takes a little planning, but boy is it worth it.
- [14:27]
A
That is a really good point actually, because I think it's somewhere around 70% of people do get a refund, so they're having too much withheld. And it is nice to get that check back on, you know, some point in April or May. But you would be better off if that were Instead in your 401k and
- [14:42]
C
growing over the years, especially if there's a match. I think if anything can come from this contest, if more companies could be focused on helping their employees understand how to manage their W4s, that would just be such a huge benefit.
- [14:58]
A
You talked about some of the things that companies do, like financial literacy, financial wellness. We at the Motley fool, we do something called Financial Health Week, which started out as Financial Health day back in 2010, the 401k champion award. When I consider that I was awarded, I consider getting it on behalf of a small group of employees who did some good work at the Motley fool in the early days, one of them was to start this Financial Health Day, which is now Financial Health Week. But the other thing at the Motley fool was that, frankly, our 401 was pretty lousy back in the 90s when the company started. And this was not unusual for small startups. Back in the day, it was hard for small companies to get a solid 401 plan. The expense ratio on our S&P 500 index fund was something like 100% and a half percent. So we got together and we asked the leadership at the company, Lee Burridge, our director of hr, and Tommy David Gardner, the co founder, said, hey, you know, we're the Motley Fool. We should have a good 401k. And they said, you're right. Why don't you guys go do that? And they empowered us to do it. We were lucky that we had leadership that was willing to let us do that. Some companies may or may not be so amenable to that. And I know there are many folks out there who've stuck in mediocre or worse plans. Do you have any advice for how employees could approach their employers about improving their plans?
- [16:17]
C
I think it's a very important discussion, and no one should be concerned about overstepping boundaries if they really see a way to create a benefit for not just themselves, but for other employees. So the idea is to present to someone close to you, a boss, or even to hr, or even in some companies, to the founder or the CEO, because it's an important, very important financial health issue for the people who work there. So it's communication, it's talking, it's maybe sitting down in the cafeteria together and just bringing it up. So don't even think about it, Just do it.
- [17:00]
A
I often make the point that the people that you'll be advocating to for a better plan are in the same boat as you. In many cases, you know, whoever's in charge of hr, whoever your boss is, maybe even the CEO or owner of the company, they're participating in the same plan and hopefully they have the same incentive as making sure it's as good as possible.
- [17:18]
C
Yeah, very good point.
- [17:19]
A
So if someone is listening to this and thinks that either they or someone they know is worthy of consideration for the 401k champion award, and I will point out, first of all, that it comes with a very attractive trophy, but also a thousand thousand dollars award, what's the application process?
- [17:35]
C
We made this so simple that anyone can do the application very, very easily. Just go onto the website, which is 401k champion.com super simple 401k champion.com and just click on where it says to find the application and I think it actually says apply here. So it's super easy and it opens up right away and then you can fill it out. Most people can fill it out in 10 or 15 minutes. It's absolutely worth the effort to tell your story, why you love your 401k. And then three champions are chosen every year and so there are three checks that are going out to each of those award winners as well. So it's worth the 15 minutes, believe me. And if you can get your co workers to do it too, that would even be better.
- [18:23]
A
And I'll point out that the applications are open and the deadline is August 28th if I remember correctly. So definitely want to get those applications in. Julie, thank you so much for joining us. And thank you for all you've done for 401k and financial literacy.
- [18:36]
C
Well, thank you very much.
- [18:43]
B
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- [20:05]
A
And we're almost halfway through 2026, so now's a good time to evaluate your tax withholdings to see if you're having too much or not enough withheld, you can use the IRS's online tax withholding estimator. Many tax prep companies like TurboTax and H& R Block offer free online tools, as do payroll companies like adep. Your own payroll provider probably does as well. You can use your 2025 tax return for guidance if your financial situation won't be much different this year. In fact, the company or professional who prepared your return may have included guidance on how much you should adjust your withholdings or estimated payments this year. If your situation has changed, perhaps due to a new job or side hustle, maybe you've realized some capital gains or done some Roth conversions, or maybe you're retired, it's even more important to evaluate how much in taxes you should be paying throughout the year. If you're not having enough withheld, rectify it as soon as possible to avoid underpayment penalties. And if you're having too much withheld, file a new W4. And then make sure that your newfound cash flow gets immediately directed to your IRA 401 or other investment account. And that, my foolish friends, is the show. Thank you so much for listening, and thanks to Bart Shannon, the engineer for this episode. As always, people on the program may have interest in the investments they talk about, and the Motley fool may have formal recommendations for or against. So don't buy or sell investments based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. I'm Robert Bro Camp fool on everybody.