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January 14, 2021
It’s the start of a new year. Time to make resolutions and get your house in order. A fresh start. You’re energized, and likely expect 2021 to be much better than the year just past.
In the midst of all this energy for planning and organizing, have you given thought, real thought, to whether you’re going to contribute to the ExxonMobil Savings Plan (EMSP)? And if so, how much and in what investment options?
Or are you coasting along, allowing inertia and previous decisions to make your choices for you?
We’re big believers in NOT coasting along, NOT allowing inertia to make your decisions. Here are some thoughts we’ll offer, encouraging you to think about what you ought to do.
For as long as ExxonMobil suspends the match, the incentive to contribute (to get those match dollars) isn’t as great as in the past. So, where do you put your money? A first decision is whether you’re going to contribute at all.
There may be good reasons for either answer.
It wouldn’t be right to prescribe how you should invest without a discussion about your risk tolerance, time horizon, other assets, and individual goals. But we have some general thoughts about factors participants in the EMSP should take into consideration as they decide how to invest their dollars.
For most participants in the EMSP, the dollars in their account will support retirement expenses. You may be years away from retirement. Even after retirement, those dollars may be needed for 30 or even 40 years. In other words, you have time on your side.
You can weather the inevitable ups and downs of the stock market in return for generally higher rates of return than what are available from Bond Units or Common Assets. Consider investing in equities (Equity Units, International Equity Units, Extended Market Units, or ExxonMobil stock).
There’s a well-known tendency among non-professional investors to invest in what’s familiar. In the context of the EMSP, that means investing in ExxonMobil stock and in the US stock market (Equity Units and to a lesser degree, Extended Market Units). But familiarity is not in itself a sign of a good investment. Nor is unfamiliarity necessarily a disqualification. Consider the investment prospects of what you’re investing in, not just whether it’s a familiar name.
Don’t forget your ExxonMobil Pension Plan benefit and Social Security. Those are promised payments, available as a lump sum and/or as a monthly annuity in the case of the pension, and as a life-long annuity in the case of Social Security. Factor in that “fixed income” component of your portfolio as you consider how to invest your EMSP. You may not need to be as conservative as you might otherwise be, given the availability of the pension benefit at retirement.
Don’t let inertia drive your personal finances. Take time to think through your objectives and the appropriate means of trying to achieve them. Get help if you need it. If you’re within ten years of retirement, we’re available to discuss your personal situation. Check out our other ExxonMobil blogs, learn more about how we help ExxonMobil professionals, or book a meeting. Let’s talk.
Please read important disclosures here.
Doug is a Partner based in the Houston office and a member of the firm’s Wealth Management practice. He is responsible for delivering investment and...
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