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Healthcare Provider Update: Healthcare Provider for Nokia Nokia primarily utilizes Aetna, a leading health insurance provider, for its employee healthcare needs. Aetna offers a wide range of health plans designed to fit the diverse needs of Nokia's workforce across various locations. Potential Healthcare Cost Increases in 2026 As we approach 2026, healthcare costs are projected to rise significantly, influenced by multiple factors impacting the Affordable Care Act (ACA) marketplace. Insurance premiums are expected to escalate by an average of 18% nationally, with some states witnessing hikes over 60%. A critical driver behind this surge is the potential expiration of federal premium subsidies, which currently shield many consumers from high out-of-pocket expenses. Without these subsidies, the affordability of healthcare will be compromised for millions, forcing consumers to reconsider their coverage options and financial strategies in anticipation of these price increases. Click here to learn more
Closed-end funds can be a good fit for Nokia employees looking for higher yields and diversification in their Retirement accounts - but you need to weigh the potential for higher returns against the risks with the help of an experienced advisor like myself - Wesley Boudreaux - of the Retirement Group, 'he said.
'Nokia employees interested in closed-end funds should consider their investment goals and risk tolerance - consulting with a professional like Patrick Ray at The Retirement Group can help you sort through the maze of these funds.'
In this article we will discuss:
- 1. Closed-end funds - basics versus open-end funds.
2. The strengths and downsides of investing in closed-end funds.
3. Benefits of closed-end funds for income-seeking retirees in a low interest rate environment.
How Much Does a Closed-End Fund Cost?
Numerous Nokia clients of ours ask about closed-end funds. An investment corporation called a closed-end fund pools funds from many different investors and invests them in stocks, bonds, and other securities. A fund generally issues a fixed number of shares and buys securities with the proceeds of an initial public offering (IPO). Its capital structure and number of shares are not yet known; the number of shares is fixed (this is why it is called closed-end). Every investor holds some of these holdings in shares.
Closed-end funds may be a good choice for retirees and pre-retirees who want regular income streams. Closed-end funds typically offer higher yields than traditional mutual funds because they are structured to invest in more assets such as real estate and commodities, according to a report by the Investment Company Institute (ICI) in 2021. Closed-end funds may also provide diversification and appreciation of capital. Retirees and pre-retirees should weigh investment goals and risk tolerance before investing in closed-end funds.
A fund's net asset value is its holdings value divided by the number of outstanding shares. Once it goes public, the fund trades on an exchange or the over-the-counter market just like any other security. A professionally managed closed-end fund can be diversified or non-diversified. Investing in the fund may also earn share price appreciation, dividend income and capital gains distributions if the fund sells individual securities at a profit during the year.
Closed-end funds - established in the nineteenth century - are often compared to mutual funds - more famous although younger - which are less well-known. The Investment Company Act of 1940 defines a closed-end company as 'any management company other than an open-end company' (such as a mutual fund). They are both categories of investment companies regulated by the Securities and Exchange Commission but have substantial differences. Nokia employees might be curious about the differences and similarities of both types of funds.
Closed-end funds are much older than open-end mutual funds and there are far fewer of them; closed-end funds number in the hundreds, while open-end mutual funds number in the thousands. While a closed-end fund is different from an exchange-traded fund (ETF), there are some similarities our Nokia could use understanding. A closed-end fund can invest like an open-end fund. But historically most closed-end funds were bond funds, the largest category being tax-exempt bond funds.
How Is a Closed-End Fund Different From an Open-End Fund?
And like most investment companies, a closed-end fund diversifies by investing in different securities. But we caution our Nokia clients that diversification alone cannot deliver a profit or protect against loss. A closed-end fund also provides diversification but also professional management and a consistent investment objective. Like mutual funds, closed-end funds do not collect taxes at the fund level but pass those tax obligations onto shareholders.
The biggest difference between a closed-end and an open-end fund that we want our Nokia clients to understand is that while an open-end fund must always be able to redeem your shares directly, most closed-end fund shares are traded on market exchanges and are generally not redeemed directly by the company issuing them. In a closed-end fund, the share count is set at the time of the IPO. Rather, an open-end fund issues and redeems shares daily-hence the name open-end-and the number of shares changes day to day - which affects the fund's net asset value (NAV).
Just like equities, closed-end funds move during the day - and their prices change throughout the day too. That is distinct from an open-end fund whose NAV is calculated only once per day after the markets close. If you want to sell your shares of a closed-end fund, the appetite of other investors to buy them will dictate how easy it is to do so and what price you will get.
Since closed-end funds trade on market exchanges, the market price of a share varies with market supply and demand. If demand exceeds supply, the market price for a closed-end fund's shares may be above its NAV, or net asset value, as the share is intrinsically valued. Demand may outstrip supply and closed-end fund shares may trade below their NAV. Some closed-end fund shares trade at a premium, most trade at a discount. This is not true of open-end funds, which will redeem your shares at NAV on the day you sell (or on the next closing day if you sell after 4 p.m.).
Joan buys 1000 shares of a closed-end mutual fund. She pays USD 14.50 a share. The NAV is USD 15.75. It amounts to Joan getting assets for USD 14,500. Joan sells her stock later for USD 16. She made USD 1,500 ($16,000 - USD 14,500) before transaction fees and commissions. Had she instead bought her shares at USD 16 and sold them at USD 14.50, Joan would have sold her portion of the fund for less than they were worth.
So how Is a Closed-End Fund Different from an Exchange-Traded Fund?
Some Nokia clients wonder how closed-end funds differ from exchange-traded funds. Exchange-traded funds are much newer than closed-end funds. A closed-end fund may also technically be an exchange-traded fund. They both trade during the day on main exchanges. But today most ETFs are passively managed. The fund seeks to replicate a given index return as closely as possible. In turn, their market prices closely match the values of the securities in its portfolio, which track the index. Closed-end funds typically trade above or below their NAV.
Interval Funds
A closed-end fund that periodically offers its shareholders the ability to sell back some or all of its shares is called an interval fund. Shareholders notify the fund by a specified date if they want to accept the offer - usually every three to six months or annually - by that date. The actual repurchase will occur at a price determined by the fund's NAV on a specified date, usually shortly after the deadline for notifying the fund of a repurchase decision.
In contrast with many closed-end funds however, an interval fund possesses the characteristics of both closed-end and open-end funds. As with mutual funds, an interval fund might choose to maintain a price tied to the fund's NAV. And unlike many closed-end funds, shares of an interval fund can be priced daily. But because shares are not redeemed daily, the SEC classes them as closed-end funds.
The Strengths of a Closed-End Fund.
Shares in closed-end funds purchased at a discount represent some kind of leverage - the ability to profit both from rising values of the fund's holdings and from rising demand for the shares themselves. This leverage could boost your investment.
Some closed-end funds borrow money at relatively low cost and put it into higher-yielding securities. This can raise a fund's return if interest rates are falling or staying low. However, if interest rates go up or low-cost credit becomes unavailable, leveraged bond funds could underperform other bond funds that use no leverage.
A closed-end fund needs not hold cash for redemptions because it has a fixed number of shares. This capital may be used to try to increase investor returns. Because shareholders do not redeem shares directly, a manager need not sell assets to cover unexpected shareholder redemptions and can instead invest in less liquid securities.
A closed-end fund is not required to accommodate sudden inflows of capital from shareholders like an open-end fund does. Such unexpected inflows may require a fund to buy securities to invest the money - even if the manager thinks the market is expensive already; a closed-end fund manager has no such problem.
The board of directors for a closed-end fund might sometimes decide to convert the fund to an open-end structure. Suppose this happened, investors who bought shares at a discount to the NAV would profit from the difference between their discounted purchase price and the NAV of the new open-end fund.
Because closed-end funds are traded and priced throughout the day instead of just at the end of the business day, you control the price you pay when you sell and the timing of your sales.Closed-end funds have no minimum purchase requirements on the secondary market.It is because closed-end funds are traded on the secondary market; typically they have no marketing expenses like open-end funds do.
Tradeoffs with a Closed-End Fund.
A closed-end fund's market price may fall if investor demand decreases. Demand may decrease if the market perceives the fund or fund manager as bad or other market conditions exist outside of the fund. And the share price may drop despite the fund manager making smart investments and increasing the fund's asset value.
More closed-end funds can invest in illiquid securities than mutual funds - which can be problematic if the fund manager must sell the securities. An illiquid security generally is one that cannot be sold within seven days at the approximate price the fund uses to calculate NAV.
Because leverage magnifies losses as well as increases return, a closed-end fund that uses leverage might underperform an unleveraged fund when its strategy does not work as expected - for instance if interest rates rise or cheap credit contracts become available - as in a credit crisis. Buy-sell agreements could increase losses; if investor demand is down, your shares will drop too.
Even if the fund manager does a good job and the fund's assets appreciate in value, lack of investor demand could cause the fund's market price to drop below your purchase price and the fund's NAV. The fact that they trade at a premium or discount means closed-end funds can be more volatile than their open-end counterparts.If the board of directors issues new shares by way of a rights offering that would dilute the value of the existing shares, the fund can increase its capital.
A closed-end fund is exposed to the same market risks as any fund that invests in stocks or bonds - for instance, the risk that a bond will default, prepay or be called early; a company will go bankrupt; and that interest rates, inflation, credit availability, political or economic conditions, and/or currency risks will affect the fund's holdings.
Closed-end fund performance is less readily available than open-end fund performance. They are sometimes also less liquid.
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You buy a ticket to a limited-time show by investing in closed-end funds. A closed-end fund has a fixed number of shares just like a theater production has fixed seats. Those shares are sold and the show/fund is closed to new investors. Just as a popular play might draw huge crowds for tickets, a successful closed-end fund might draw significant investor interest and potentially better returns. Just as some shows are better than others, you should research and choose a closed-end fund that meets your investment goals and risk tolerance, however.
Added Fact:
A new study from Morningstar published in April 2023 concluded that closed-end funds could be a good fit for income-seeking investors at low interest rates. The study said closed-end funds that focus on high-yield bonds and dividend-paying stocks historically have offered higher yields than open-end mutual funds. This is especially useful for 60-something investors who want regular income streams in retirement. Open-end funds may provide better yields and diversification benefits than traditional retirement investments. (Source: Morningstar, April 2023)
Added Analogy:
Closed-end investing is like joining an elite club with a finite number of memberships. Like the club that gives members special privileges and amenities, closed-end funds offer investors a broad spectrum of investments. Every membership gets a piece of the fund's holdings, with potential gains for investors. As different clubs serve different interests, so too must investors research and select closed-end funds that meet their financial goals and tolerance for risk. Selecting the right 'club' or closed-end fund can provide income generation, potential capital appreciation and diversification for retirees and pre-retirees.
Sources:
1. Reaves Asset Management. 'Retirees: Keep Your Eyes on Income with CEFs.' Reaves Asset Management, https://insights.reavesam.com/blog/retirees-keep-your-eyes-on-income-with-cef?utm_source=chatgpt.com .
2. Investopedia. 'Closed-End vs. Open-End Investments: What's the Difference?' Investopedia, https://www.investopedia.com/ask/answers/042315/what-are-primary-differences-between-closed-end-investment-and-open-end-investment.asp?utm_source=chatgpt.com .
3. InvestmentNews. 'Why Anxious Retirees Should Consider Closed-End Funds.' InvestmentNews, https://www.investmentnews.com/retirement-planning/why-anxious-retirees-should-consider-closed-end-funds/222196?utm_source=chatgpt.com .
4. BlackRock. 'Five Reasons to Consider Closed-End Funds in Your Portfolio.' BlackRock, https://www.blackrock.com/us/individual/education/closed-end-funds/insights/reasons-to-use-closed-end-funds?utm_source=chatgpt.com .
5. Financial Planning. 'Closed-End Funds: From All Angles.' Financial Planning, https://www.financial-planning.com/news/closed-end-funds-from-all-angles?utm_source=chatgpt.com .
What unique features and benefits does the Nokia Retirement Income Plan offer to its participants, and how can these benefits be maximized by current employees of Nokia of America Corporation? Additionally, what resources are available for employees to educate themselves about the various aspects of the plan, including eligibility, distribution options, and potential tax implications?
The Nokia Retirement Income Plan offers participants a defined benefit plan designed to provide financial security through retirement by supplementing Social Security and other retirement savings. Benefits can be maximized through strategies like ensuring accurate service records, understanding distribution options such as lump-sum payments or annuities, and consulting financial advisors to align these benefits with long-term retirement goals(Nokia of America Corpor…).
How does participation in the Nokia Retirement Income Plan facilitate financial security in retirement for employees, specifically in terms of pension benefit calculations and options such as lump-sum distributions or annuities? Moreover, what are some strategies that Nokia of America Corporation employees can employ to ensure they are fully prepared to utilize their retirement benefits as they transition towards retirement?
Participation in the Nokia Retirement Income Plan ensures financial security in retirement through pension benefit calculations based on service years and salary history. Employees can choose from options like lump-sum distributions or lifetime annuities. By carefully selecting a distribution option and incorporating it into a broader retirement strategy, employees can optimize financial outcomes(Nokia of America Corpor…).
With respect to changes in personal circumstances, such as marriage or divorce, what provisions does the Nokia Retirement Income Plan have to protect the benefits of employees from Nokia of America Corporation? How can employees navigate the complexities of Qualified Domestic Relations Orders (QDROs) within the context of their pension benefits, and what resources are available to assist them in this process?
The Nokia Retirement Income Plan protects benefits in cases of personal changes such as marriage or divorce through provisions like the Qualified Domestic Relations Order (QDRO). Employees can consult the Nokia Benefits Resource Center for assistance in navigating QDROs to ensure a fair division of benefits. Guidance is available for understanding the QDRO requirements and how they apply to their pension(Nokia of America Corpor…).
What steps must employees take to initiate the commencement of their benefits from the Nokia Retirement Income Plan once they reach retirement age? Furthermore, what are the important considerations employees need to keep in mind regarding the selection of a payment form and any potential impact this may have on their overall financial strategy during retirement?
To initiate pension benefits under the Nokia Retirement Income Plan, employees must submit a claim when they reach retirement age. They should consider factors such as payment form options (lump sum or annuity) and the impact on long-term financial plans. Choosing the appropriate payment form is critical to maximizing retirement income(Nokia of America Corpor…).
How can employees of Nokia of America Corporation ensure their beneficiaries are properly designated under the Nokia Retirement Income Plan, and what implications does this designation have for benefit distribution in the event of their death? Additionally, what steps should employees take to update their beneficiary designations in light of significant life events?
Employees can ensure their beneficiaries are properly designated by updating their beneficiary forms through the Nokia Benefits Resource Center. Proper designation affects how benefits are distributed in the event of their death, and it is crucial to update designations after life events like marriage, divorce, or the birth of a child(Nokia of America Corpor…).
In terms of compliance with federal regulations, how does the Nokia Retirement Income Plan adhere to ERISA guidelines concerning employee benefits, and what rights do employees of Nokia of America Corporation possess under these regulations? Also, how can employees exercise their rights effectively if they encounter issues regarding their pension benefits?
The Nokia Retirement Income Plan complies with the Employee Retirement Income Security Act (ERISA), giving employees the right to receive information about their benefits and hold fiduciaries accountable. If employees face issues with their pension, they can exercise their rights through claims and appeals, with recourse available through legal action if necessary(Nokia of America Corpor…).
How does the Nokia of America Corporation support employees who might be eligible for a disability pension under the Nokia Retirement Income Plan, and what specific eligibility criteria must be met? Additionally, what resources are available to assist employees in understanding this facet of their retirement benefits?
Employees eligible for a disability pension under the Nokia Retirement Income Plan must meet specific criteria, such as proving permanent disability before reaching retirement age. Resources like the Nokia Benefits Resource Center can provide guidance on the eligibility process and required documentation(Nokia of America Corpor…).
What specific actions should an employee of Nokia of America Corporation take when applying for a pension benefit under the Nokia Retirement Income Plan, and what documentation is typically required to streamline this process? Furthermore, in the event of a claim denial, what recourse do employees have to challenge the decision through the plan's appeal process?
When applying for pension benefits, employees should provide documentation such as proof of age and employment history. In case of a denial, they have the right to appeal through the Employee Benefits Committee. If necessary, employees can further appeal to federal courts under ERISA(Nokia of America Corpor…).
How does the pension benefit guarantee from the Pension Benefit Guaranty Corporation (PBGC) apply to employees of Nokia of America Corporation, and what are the limitations of this guarantee in protecting retirement benefits? Additionally, how can understanding these protections help employees make informed decisions regarding their retirement planning?
The Pension Benefit Guaranty Corporation (PBGC) guarantees benefits under the Nokia Retirement Income Plan in case the plan terminates. However, there are limitations, such as caps on benefit amounts. Understanding these protections helps employees make informed decisions about their retirement planning(Nokia of America Corpor…).
How can employees contact the Nokia Benefits Resource Center to gain more information about their benefits and the specific resources available under the Nokia Retirement Income Plan? What are the recommended communication channels and hours for reaching out to ensure timely and effective assistance?
Employees can contact the Nokia Benefits Resource Center through the Your Benefits Resources (YBR) website or by calling the designated phone line. It is recommended to use these channels during business hours (9:00 a.m. to 5:00 p.m. ET) for timely assistance with pension-related questions(Nokia of America Corpor…).
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