There are other services available to manage my Southwest Airlines retirement plans with, what makes your system better?

That's a great question. There are two main issues you want to consider when managing your retirement portfolios. The first is a method to show you when it's safe to be fully invested, partially invested or out of the market entirely in the safety of cash and the second is a thoroughly tested fund selection system. 

We say managing because each of us should be actively upgrading our retirement holdings monthly to the best performing funds if you want to outperform the market over the long term. Buy and hold asset allocation is a recipe for under performance whether it's with your retirement portfolio or with other dollars. Look at it this way. Money is constantly rotating on Wall Street from sector to sector and industry to industry. Normally, when the market favors a certain area like oil stocks, or biotech, or international stocks those areas will start to trend, and trend, and trend, for months on end. If the funds you bought to hold 2 years ago don't hold the kind of stocks that are being favored by the market at the time then they will languish month after month under performing the major indexes and occasionally even lose money when the rest of the market is going up. This is why it's critically important to constantly upgrade your holdings to the funds which are out performing the others over the recent past in order to focus your investments in those funds which are holding the stocks that the major institutions are accumulating at the time.

Before jumping into the market though you want to analyze overall market conditions to determine whether the market currently has a positive or negative bias. The 401k Maximizer Major Market Analysis tells conservative and moderate risk investors whether it's safe to be fully invested or partially invested in the safety of the credit union as we walk forward in time.

This whole issue is so important it forms the backbone of the 401k Maximizer. At 401k Maximizer we look at 7 different measures of underlying market internals, sometimes referred to as market breadth, of both the NASDAQ and the NYSE to determine how aggressive our fund recommendations should be. These market internals gauge the strength of both the NASDAQ's and NYSE's up volume, down volume, advancing issues, declining issues, accumulation, distribution, and trend strength on a weekly basis. All of this information forms a consensus of either positive or negative market bias displayed by two simple indicators for each index. We show both of these indicators to our subscribers in every month end newsletter. The indicators then drive our recommendations about whether it's safe to be fully invested or partially invested in the safety of the Credit Union fund at the time.

The second key component of any successful method to manage our 401k funds with is a fund selection system. 401k Maximizer uses an enhanced ranking method based upon each fund’s multi-period weighted returns. This approach is considered one of the most robust mutual fund selection techniques available and has been used very successfully for years by professional money management firms specializing in mutual fund up-grading.

Which investment method is best for me? Risk vs. Reward

The Aggressive method stays 100% invested in the best ranked funds on a rolling month to month basis.  This allows investors who don't like adjusting their market exposure to account for current market conditions, to stay invested in the highest ranked funds.  In most market conditions, short of a bear market, the Aggressive method will probably out perform the Moderate and the Conservative risk approaches, but not by a lot, and clearly not enough so that subscribers approaching retirement, or in retirement, or subscribers who just don’t want to see their account values decrease a lot from their peak values should follow the Aggressive approach. 

Conservative and Moderate risk portfolios reduce their market exposure by holding fewer funds to lower portfolio volatility when the bias of the market becomes negative. 

There are several other value added features of the 401k Maximizer system that you'll want to carefully consider, including:

* Ease of Use

* Clear, user friendly, presentation

* Specific Recommendations for Conservative, Moderate and Aggressive investors

* Different market exposure level recommendations for Conservative, Moderate and Aggressive investors when the major market conditions and bias change.

* 401k Maximizer uses the actual price data for each available fund. The market index data is from FastTrack.

* Recommendations are made before the end of the month. Additionally we monitor the markets daily and if it is necessary we will send you an urgent mid-month set of recommendations.

Why spend all the time upgrading my 401k holdings every month? I feel more comfortable just buying and holding 2 or 3 good funds.

One of the golden nuggets of the retirement plan is the ability to upgrade to the best performing funds monthly without worrying about short term capital gains taxes and the commissions you would incur trying to do this through a normal low cost broker. Consider this, the commission to buy and sell a fund from a low cost broker outside of the retirement plan might run $50 to $100 per month every time you made a change. Then multiply this times holding 5-6 funds at a time and you can see how the expenses alone would kill your performance very quickly.

To see the real power of constantly upgrading to the best performing funds on a rolling month to month basis let's compare similar gains in the market with a buy and hold system versus an upgrade system. Hypothetically, we're going to make 2 investments. In our first investment we buy fund ABC at the beginning of the year and hold it for the entire year. This buy and hold strategy gives us a return of 20% for the year, a great return! With our second investment we buy fund ABC at the beginning of the year and then sell it several months later with an 8% gain. Our model now says to buy fund DEF which we purchase and hold for a 7% gain. Next, the model says to buy fund GHI which we hold for a -2% loss. Finally, our model says to buy fund JKL which we hold to the end of the year for a 7% gain. Now by the end of the year our upgrading has produced what appears to be a similar 20% gain = +8%, +7%,-2%, +7% but in reality we made more money than buy and hold. Our buy and hold approach gained 20% but our upgrading produced a yearly gain of 21.18%!! 

How did this happen? It's because when we continually upgrade to the best performing funds throughout the course of a year we are constantly leveraging our gains from the previous investment into our new investment. To make this clearer from the example above after our first gain of 8% a $100 starting value is now worth $108. So when we make the next purchase with a gain of 7% we are realizing a gain of 7% on our original $100 investment plus a gain of 7% on the $8 gain from the first investment. Remember that our account had grown to $108 before we made the second investment. And when you do that over and over and over again throughout the year you leverage your gains with the power of compounding again and again. It's that power of compounding gains over and over again that is the magic golden nugget of our Super Saver 401k. Albert Einstein referred to the power of compounding as the 8'th wonder of the world and when you see it in practice you have to agree that not only does E = M*C*C but that compounded gains are magical!

How do I use your system?

It's easy. Just subscribe and you will receive an email message during the last week of each month announcing that new recommendations are available. This message will prompt you as a subscriber to log into the 401k Maximizer web site and Sign In to view the new Recommendations and Market Analysis. 401k Maximizer is published several days before the end of every month in order to give subscribers time to re-allocate to the new recommendations before the beginning of the new month. 401k Maximizer is also published during the course of the month if any significant market changes have occurred which would warrant a re-allocation or reduction in market exposure. If you do not receive an email message towards the end of each month, you can always visit the web site and SignIn and see if they new recommendations have already been posted.

The key is to stay with the trend constantly up-grading to the best performing funds.    

For the Pilot Plan -- How do I implement the 401k Maximizer recommendations?

• New Subscribers: 

Use the “Rebalance Exchange” option to implement the model portfolio that best meets your needs if you have held your current positions for more than 30 days.  Here are the steps for Rebalancing:
1. Log into the 401k Account Access website.  The URL is: https://www.401kaccess.com
2. On the top of the page click on “Transactions”
3. Then in the drop-down, click on “Investment/Portfolio Changes/Current Balance Transfer”
4. To do a Rebalance:  Scroll to the bottom of the page and on the left hand side in the “Rebalance Exchange” box select “Rebalance your entire account to a Wealth Allocation or build your own model”.  And click on “Continue”.
5. In the next screen, click on “Build your own model” and “Continue”.
6. Click “OK” when a message appears.
7. On the next web page, enter the percents that you want to invest in each of the listed funds. The percents should add to 100% at the bottom. Then click “Continue”.

• Current Subscribers: 

Use the Fund Transfer approach by following the steps below:
1. Log into the 401k Account Access website.  The URL is: https://www.401kaccess.com
2. On the top of the page click on “Transactions”
3. Then in the drop-down, click on “Investment/Portfolio Changes/Current Balance Transfer”
4. To do a fund to fund transfer:  Scroll to the bottom of the page and on the right hand side in the “Individual Fund Transfer” box select “Percent Exchange”.
5. Select “Continue” and then fill in the box with 100% of the fund which you want to transfer out of, then select the continue button again.
6. On the next web page, enter the percents that you want to invest in each of the listed funds. The percents should add to 100% at the bottom
7. Then click “Continue”
8. If necessary go thru steps 9 thru 11 again for other funds to sell.

• For Future Fund Elections:

1. Highlight “Transactions – Investment/Portfolio changes/Future Fund Election.”
2. Select the radio button at the bottom next to “Build your own model.”
3. Modify the percentages you want in your 401k.
4. Click on the radio button at bottom where it says “No, I do not wish to have my entire account automatically rebalanced once a year.”
5. Select “Continue” and then select the “Process” button.

If you still have questions about your account or whether you are doing this correctly call Account Access at 1-800-777-401k and tell them what percentages you want in each fund.  

 For the Company and Profit Sharing Plans -- How do I implement the 401k Maximizer recommendations?

• New Subscribers: 

If it has been less than 30 days since you last made changes in your account then skip to the section below labeled “Current Subscribers”.  If you are a new subscriber who has held your current positions for more than 30 days then use the “Rebalance Exchange” option, shown below, to implement the model portfolio that best meets your needs. 

• Rebalance Exchange option - here are the steps for Rebalancing:
1. Log into the JP Morgan website. The web address of the Profit Sharing Plan is https://www.retireonline.com
2. The next page you see is labeled “My Accounts”.
3. Click on the link labeled “Southwest Airlines Co. Profit Sharing Plan.
4. This brings up the "Account Balance Page". On the left side of this screen is a section with two major categories, "Account Detail" and "Account Management". Under the "Account Management" heading is a link that says "Manage Investments". Click on it.
5. On this page there are four links in the middle of the page labeled View Your Investment Summary, Fund to Fund Transfer, Rebalance Your Account, and Change Future Investments. Select the link labeled “Rebalance Your Account”.
6. On the next page, fill in the percentages next to each fund so they total 100%
7. Click on the “Continue” button on the bottom of the page and then the “Accept” button.

• Current Subscribers:

Use the Fund to Fund Transfer approach by following the steps below:
1. Log into the JP Morgan website. For the Company (Non-Pilot) Plan the URL is www.freedomtoretire.com  and the URL for the Profit Sharing Plan is https://www.retireonline.com
2. The next page you see is labeled “My Accounts”.
3. Click on the link labeled “Southwest Airlines Co. Profit Sharing Plan”.
4. This brings up the "Account Balance Page". On the left side of this screen is a section with two major categories, "Account Detail" and "Account Management". Under the "Account Management" heading is a link that says "Manage Investments". Click on it.
5. On this page there are four links in the middle of the page labeled View Your Investment Summary, Fund to Fund Transfer, Rebalance your account, and Change Future Investments. Select the link labeled “Fund to Fund Transfer”.
6. Scroll down the page and select the fund you want to sell, and then at the bottom of the page under Transfer Type select “Percentage Amount”, and in the box labeled “Amount to Transfer” fill in 100%.
7. Select the “Continue” button.
8. Now select the fund you are going to transfer the money from the fund you selected on the previous page into, and put 100% in the box in the column labeled “New %”.
9. Select the “Continue” button.
10. Then Accept.  Repeat this process for each fund you are making changes to. 

• For Future fund elections:


1. Return to the "Account Balance Page". On the left side of this screen is a section with two major categories, "Account Detail" and "Account Management".
2. Under the "Account Management" heading is a link that says "Manage Investments". Click on it.
3. On this page you will be given four major choices: View Your Investment Summary, Fund to Fund Transfer, Rebalance your account, and Change Future Investments. Select the link labeled Change Future Investments.
4. This next screen will allow you to select where you want the money coming out of your paycheck to go. Scroll down to the Investment choice section and fill in the percentages you desire.
5. Then choose the Continue button at the bottom of the screen.
6. Finally, click on the Accept button. 

The fund to fund transfer allows us to change one fund at a time and move the money from that one fund into a new fund.  According to J.P. Morgan you can make as many fund-to-fund transfers you want each month, but only in two sessions.  What this means is that we can use the fund-to-fund transfer feature to manage our accounts but only twice a month. 

Please note that if a transfer request is made on a business day by 2:59 PM Central Time, the transfer is processed that day and is based on the fund closing prices that day. Transfer requests received on or after 3 PM Central time are processed the following day based on the closing price of the funds on that day.

If you still have questions about your account or whether you are doing this correctly call J.P. Morgan at (1-866-588-2728).