Traditional IRA or Roth IRA?

Traditional IRA or Roth IRA?

The United States Congress and the Internal Revenue Service want to help you save money, accumulate wealth, and retire. What? Before you claim that I fell off my rocker, read on. Like many congressionally inspired programs, the Individual Retirement Account (IRA) was fairly simple and straightforward in its initial conception. As congress tweaked and enhanced these tax-favored vehicles, the initial simple concept of the IRA has developed into quite a complex web of rules across a host of different types of IRAs. This article will focus on one of the most common IRA related questions, “Should I have a Traditional…

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Investment Management: The Fearful Investor

The Emotions of Investing – Part 2 – “The Fearful Investor”

Investing is serious business. An investor is wise to be concerned about losses in his portfolio. How you think about and manage this risk will play a significant role in your financial success. One trap I’ve seen investors fall into is what I call The Hibernation Trap. This occurs when an individual does not fully understand how much risk he is taking with his portfolio and as a result feels compelled to bail-out of the market when performance gets choppy. Consider the following example of a seasoned professional business man that allows his emotions to encourage knee-jerk reactions. Like most…

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Investment Management: The Effects of Greed

The Emotions of Investing – Part 3 – “The Effects of Greed”

Just as fear can drive equity values in a bear market, greed plays a role when a rising stock market defies all laws of gravity. Emotional investing being driven by the investment community’s greed was responsible for the incredible run and subsequent bubble in the stock market during the late nineties. While greed in the aggregate that is driven by society in general can cause major financial bubbles worldwide, our own personal greed can wreak havoc in our own investment accounts. Take Andrea, for example, a young advertising professional that is a do-it-yourselfer when it comes to investing for her…

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Investment Management: The Return Chaser

The Emotions of Investing – Part 1 – “The Return Chaser”

Chasing the hot mutual fund or segment of the market rarely works. Let’s consider a typical scenario that investors go through when reviewing their 401k statement. Dave is a hard-working father of two who lives well within his means. He recognizes the value of saving pretax and aims to take advantage of compound growth by deferring as much as possible from his salary into his company’s 401k plan. Each January, Dave looks at his statement to see how his account has performed. Unfortunately, his account is only up 7% for the year while the S&P500 notched a gain of 12%….

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What if I can't pay my bills?

What if I can’t pay my bills?

Paying your bills on time is always the most important thing you can do to ensure your good credit. But, if you run into trouble, there are some things you should do immediately: If you find you’re having difficulty meeting your monthly financial obligations, you should call your creditors as soon as possible. Whatever you do, don’t miss or skip your payments. Instead, call your creditor and explain the reason for your difficulty (e.g., job loss, medical emergency, etc.). Ask your creditor(s) for a revised payment schedule. Creditors want to keep receiving the money you borrowed from them, so it’s…

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Should You Use Credit?

Should You Use Credit?

Your goal as a consumer should be to establish a strong credit history. Doing so affects many aspects of our lives such as buying or leasing housing, using utilities, even applying for a job. Those with a good credit history demonstrate their trustworthiness and responsibility. You should use credit if: You’re able to limit your credit spending to no more than 15-20% of your take-home pay. You’re looking to establish a credit history (if you have not used credit in the past). You need to make a large purchase such as a home, appliance or a college education. You should…

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Do you know the warning signs of too much debt?

Do you know the warning signs of too much debt?

You know you’re spending too much money when: You’re not sure how much you owe. You’re making only the minimum payments. You borrow from one credit card or credit line to pay another. You have to work overtime to keep up with your spending. You are consistently late with payments. You begin to be denied credit. Other signs that you may be headed for trouble include: You’re at the maximum credit limit on your credit cards or other loans. You delay visits to the doctor because money is tight. You know that losing a job would create instant financial trouble….

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What Type of Credit Do You Need?

What Type of Credit Do You Need?

Consumer credit is a loan to an individual to purchase goods and/or services for personal, family, or household use. The person who takes out a loan promises to repay the loan in full, usually with interest, at set dates in the future. The “interest” is a charge added to the original amount of the loan to compensate the lender for the use of its money. There are several different types of consumer credit: Revolving credit: a line of credit that can be used up to the set credit limit. As soon as payment is made, that money becomes available to…

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Three 401k Blunders

Three 401k Blunders. Don’t Make These Mistakes!

You may think that your employer and the IRS are two of the last places from which you would receive a free and incredibly valuable gift. Think again! Your 401k plan is a powerful benefit that allows you to take control of your retirement destiny. Avoiding these three mistakes will increase the probability you will be able to live a worry-free retirement. Strike One: Not participating: Most of today’s workers will not benefit from a lucrative defined benefit pension plan. To what degree social security will be available to you upon your retirement is debatable and uncertain. Providing for your…

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College Savings 101

College Savings Information

Helping your children obtain a college education can be one of the most rewarding experiences for a parent. It will also be one of the largest expenditures. Fortunately, families with a desire to save for college education have powerful tax efficient tools at their disposal. This article will focus on two of the more popular college savings vehicles: 529 plans and Coverdell Savings Accounts. State-Sponsored 529 Plans: 529 plans have many benefits and are oftentimes the preferred college savings vehicle. These plans allow relatives or friends to save money toward higher education expenses for a child or any other loved…

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