Retirement Guys: Four ways to get more out of your investmentsWritten by Nolan Baker Mark Clair | | firstname.lastname@example.org
In today’s fast-paced society, it can be easy to avoid looking at what seems like a long time away. But since time goes by so quickly, taking a little bit of time now can save the average family years of headaches in the long run. Today we are going to share with you four easy and quick ways to get more out of your investment accounts.
No. 1: Consolidate investment accounts. The goal of doing this is to reduce expenses and to make it easier to keep track of everything. Many families end up having several different accounts as they change jobs, buy new investments and make changes over the years. Normally, each custodian, the company that holds retirement accounts, has annual fees. By consolidating smaller accounts, an investor could avoid paying multiple custodian fees.
Also, the more accounts the investor has, the harder it can become to keep track of the performance and investment allocation of their total plan. By consolidating accounts, it can be easier to see the bottom line and keep track of everything.
No. 2: Take advantage of tax diversification. The three different ways to save and invest are taxable, tax-deferred and tax-free. Normally, a family builds up an emergency account in the taxable category. Then once someone gets a job or starts a business, they begin to save and invest in tax-deferred accounts such as traditional IRAs or 401(k) plans. This is usually where many families stop. As a family gets to this point, don’t forget to consider the long-term advantage of tax-free accounts. This can be done by shifting savings into accounts like Roth IRAs or other tax-free accounts. Instead of keeping the lion’s share of savings in one category, try keeping money spread out among the three different ways to save and invest.
No. 3: Max out early and catch up. Study after study has shown the impact and the importance of starting to save and invest early in life. It is so much easier to start out small and early than to try and catch up later in life, so start now. Parents and grandparents, it is a great idea to talk with children and grandchildren to get them involved in being financially self-reliant. For those who feel they are running a bit behind due to getting started later in life or the stock market performance during the past decade, don’t get discouraged. Keep on saving and investing and remember, catch-up provisions could allow you to save more and in ways you never knew were possible.
No. 4: Properly plan distributions. Proper distribution planning becomes more important as a person or family moves into retirement. Now that you have saved and invested and have built up several accounts, how and which investment account should be used first becomes very important. One piece of advice we have for seniors and retirees is to create separate “buckets” of money for different time frames and different risks. We also recommend keeping money set aside in an emergency account.
No matter if an investor is 20 or 70, following these four steps can be a great way to get more out of investment accounts this year and beyond.
For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1370 WSPD or visit www.retirementguysradio.com. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537.(419) 842-0550.
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