Line workers are particularly vital as first responders during accidents and weather disasters. The 2021 power outage in Texas is only one of the most recent in a series of outages that have impacted the U.S.
“Line workers spring into action when the weather takes a turn for the worst, braving challenging conditions to climb 40 ft [12 m] in the air to restore power,” said Jim Matheson, CEO of the National Rural Electric Cooperative Association (NRECA). “Electric coop line workers tend to 2.7 million miles [4.3 million km] of power line in some of the most rugged terrain in our country and provide invaluable service to rural communities, in particular. It’s a dangerous job that requires an always-on commitment to safety, but it is also rewarding.”
The American Psychological Association recently published the results of a survey assessing the impact of the past two years on people’s stress levels. Gas prices, energy bills and grocery costs, among others, accounted for 87% of stress causes. Prolonged stress caused by personal financial uncertainty can have implications for first responders and, therefore, on the essential service they provide.
NRECA represents nearly 900 consumer-owned, not-for-profit electric coops and public power districts as well as the line workers who keep the electricity flowing. One of NRECA’s roles is to promote safety and mitigate the danger associated with the job. To help support line workers’ financial health, NRECA has enlisted a longtime partner: Homestead Advisers.
In The Beginning
More than 30 years ago, NRECA founded Homestead Advisers to offer comprehensive group and individual solutions to electric coops, including line workers, to help with their financial goals. Homestead Advisers is the investment advisor or administrator of the 10 Homestead mutual funds, known as the Homestead Funds, including assets held in deferred compensation and retiree medical plans. Homestead Advisers returns its profits to NRECA to support the valuable work of member coops and employees, including line workers.
Whether that is buying a house or celebrating a birthday, a wedding or an anniversary, people’s investment goals change as they go through life. Therefore, it is important to provide flexible financial resources that can be used for all these purposes at any point in time.
Life’s Emergencies
“How can I put money aside for my child’s education?” and “How can I set money aside outside of my retirement plans for life’s emergencies?” are just a couple of the questions line workers ask Homestead Advisers.
Creating a special fund to handle emergencies is the best way to start any investing journey. Everyone has emergencies. It is always a good idea to maintain a rainy-day account that can cover household expenses for three months to six months in case of a job change, major household repair or unexpected medical bills. A just-in-case fund can reduce stress at times when there is an extraordinary financial need.
Many line workers learn about Homestead Funds’ investment options as soon as they join their electric coop, making it possible to start investing right away. There are many reasons to invest, but one of the main ones is to build an emergency savings fund. Fortunately, not everyone will have to use all or even a portion of the money from these accounts for an emergency, but having the funds set aside provides financial support if needed.
Starting an emergency fund is easy, and anyone can begin with any amount, for instance, $50 per pay period. Many line workers find it is easier to save money when it is withdrawn directly from their paychecks and invested automatically. The enrollment process for auto-investing is simple, the coop contributes employee funds on a quarterly basis and the money is invested within a couple days.
Financial Guidance
Homestead Advisers also provides financial guidance to line workers across the U.S. Representatives take the time to help line workers understand their goals, risk tolerance and financial situation, and strike the right balance between saving and investing.
Homestead Advisers recommends having savings sufficient to cover at least three months to six months of living expenses in case of job loss, a medical emergency or some other unforeseen hardship. Once that is covered, line workers can focus on investing.
As with an emergency fund, everyone needs to start somewhere when it comes to investing. For many people that means making regular contributions to an investment program through payroll deductions or another kind of automatic purchase. People can start with small amounts and increase contributions as they earn more money. Over time, the effects of compounding can help to grow wealth.
Unlike saving, where safety is the goal, investing requires taking risk with a goal of obtaining higher returns in pursuit of longer-term objectives, like funding a college education or retirement. However, not investing can be surprisingly risky, too. While most people do not think about it, their money becomes less valuable every day because of inflation. Typically, interest earned in bank savings accounts does not keep up with inflation, either. Over the years, the prices of the things people buy begin to outpace the cash they have to pay for them.
Investment Strategy
Although there are many types of investment accounts, one of the most widely used types is an individual or jointly owned taxable account. Investment accounts do not guarantee returns the way bank accounts do, but they may provide comparable, and sometimes better, rates of return.
An effective investment strategy is having a mix of investments. Depending on an individual’s tolerance for risk and when the money will be needed, a small percentage of an investment could be put into funds that offer growth potential. However, if the individual is seeking to build an account that can be tapped in an emergency, then the primary focus should be on preserving the capital saved.
Patience Is Key
With roots in pension fund management, Homestead Advisers’ strategy for adding value is to manage Homestead Funds with patience, thoroughness and discipline — choosing to invest over a longer time horizon than many other managers.
This patience and thoroughness of Homestead Advisers’ fund management is analogous to that shown by line workers day in and day out. By taking a Main Street approach to Wall Street investing, Homestead Advisers is committed to supporting line workers’ long-term financial wellness and financial goals. The investment firm is proud to take some of the financial pressure off people who have such demanding jobs.
Mark Santero became president and CEO of RE Advisers and president, CEO, and director of Homestead Funds in June 2018. A veteran of Wall Street, he has spent most of his 35 years in investment and wealth-management leadership roles at Dreyfus, BNY Mellon, and Oppenheimer. RE Advisers, a subsidiary of NRECA, directs $10.3 billion in assets as of March 31, 2018.
