How Much Risk Should I Be Taking in My Retirement Assets?

How Much Risk Should I Be Taking in My Retirement Assets?

The answer depends on a number of different factors including but not limited to: your age, the size of your portfolio, your personal goals and objectives, and your tolerance for risk. Many investors have been told that if you are young, you should be heavily invested in stocks and if you are old you should be heavily invested in bonds. Unfortunately, it isn’t that easy. An old rule of thumb that some investors use is that the percentage of bonds in your IRA Rollover should be equal to your age. While using such an allocation is better than not having…

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What Are Treasury Inflation Protected Securities

What Are Treasury Inflation Protected Securities

TIPS provide investors with a means to hedge against inflation. TIPS are similar to traditional Treasury bonds in that they pay coupon interest semi-annually. Unlike traditional Treasury bonds, however, the principal of a TIPS bond is adjusted to reflect changes in inflation over the life of the bond. The adjustment in principal moves in tandem with the Consumer Price Index (CPI). Since inflation rates tend to increase over time, these adjustments are generally positive. While unlikely, there can be no guarantees that the CPI won’t decline, in turn causing a negative adjustment to the principal of TIPS. When TIPS mature,…

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What is an Investment Policy Statement?

What is an Investment Policy Statement?

An investment policy statement (IPS) describes the investment philosophies and investment management procedures to be utilized when providing investment advisory services. The principal reason for having an investment policy statement and for putting it in writing is to enable you to protect your portfolio from ad hoc revisions of a sound long-term approach. Without an investment policy statement, in times of market turmoil, investors are often inclined to make impromptu and emotional investment decisions that are inconsistent with prudent investment management principles. Your investment policy statement is intended to provide a well thought out framework from which sound investment decisions…

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What Do I Do After I Inherit an IRA?

What Do I Do After I Inherit an IRA?

The rules for inherited IRAs vary depending on whether you are the spouse of the deceased or someone else. The spouse is allowed to roll over the decedent’s IRA into his or her own IRA. After combining the inherited IRA with your own IRA, normal IRA rules will apply. Everyone other than the spouse treats the inherited IRA as a beneficiary IRA. You cannot make any new contributions to the account, and you must take a RMD (Required Minimum Distribution) over your lifetime. IRS rules that apply to inherited IRAs can be complex and difficult to sort through. Your age,…

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How Important Are Taxes When Investing?

How Important Are Taxes When Investing?

Both fees and taxes reduce your investment performance. Pay special attention to investment composition and rebalancing procedures for taxable accounts. Through the use of exchange traded funds, municipal bonds, rebalancing procedures and the minimum short-term gain accounting method, you may be able to minimize your tax liability in non-qualified accounts. 401k Rollover Frequently Asked Questions Here are some answer to your frequently asked questions regarding 401k rollovers. What will the stock market do tomorrow, next month, or next year? How do I know what my investment return is? Why is my 401k such an important benefit? How important are taxes…

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What is an IRA Rollover and How Does It Work?

What is an IRA Rollover and How Does It Work?

First, let’s talk about terminology. An IRA Rollover and Rollover IRA are often used as interchangeable terms. For the purpose of this discussion, we will use IRA Rollover. One of the most common purposes for an IRA Rollover is to maintain the favorable tax status of the dollars you have accumulated in your former employer’s 401K. Rolling over your dollars from your 401K to an IRA Rollover is a simple process, but it can have serious tax implications if you are not careful. The IRS allows you to keep benefiting from the deferred tax status of your 401K account after…

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What is a 401k Rollover and How Does It Work?

What is a 401k Rollover and How Does It Work?

When you hear the term 401K rollover it is referring to one of two situations The process of rolling over your prior employer’s 401K to your current employer’s 401K. The process of rolling over your prior employer’s 401K to an IRA Rollover. Which is better? From a tax standpoint, if they are done properly, it makes no difference. Our feeling is that it is almost always a better decision to rollover your old 401K account to a Rollover IRA. When rolling your 401K to an IRA Rollover, you continue to benefit from the tax deferred status you enjoyed with your…

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Is There Such a Thing as a “Free Lunch” in Investing?

Is There Such a Thing as a “Free Lunch” in Investing?

Investment theory and historical capital market return data suggest that, over long periods of time, there is a relationship between the level of investment risk and portfolio return. In general, in order to attain higher returns one must accept higher risk (i.e. volatility of return). Consider the following two asset classes: Money market funds have a very low risk and pay rates of return consistent with ultra short bonds that are often only slightly more generous than bank savings accounts. Emerging market stocks will sometimes provide eye-popping returns, albeit with very high risk. An investor knows what one is going…

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Why Is My 401k Such An Important Benefit?

Why Is My 401k Such An Important Benefit?

Your 401K plan allows you to control your own retirement destiny. Deferring as much as you can afford to into your 401K and taking advantage of your employer’s matching funds are key components to maximizing your benefit. Being diligent with your savings, however, is just half the battle. The are countless stories about 401K accounts being slashed by 50% or more during the bear markets of 2000-2002 and/or 2008-2009. Many other 401K participants are invested too conservatively to realistically reach their retirement goals. Others simply have no idea how their 401K should be invested, so they take the least painful…

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What is the Future of the Stock Market?

What is the Future of the Stock Market?

It will change. Nobody knows in what direction it will change today, tomorrow, next month or next year. If an investment professional tells you they know and can guarantee what the stock market is going to do next year, turn the other way and run for your life! A prudent investor will employ long-term strategies with a proven track record across complete market cycles. One of the greatest attributes of successful investing is discipline. The ability to survive the ups and downs of a complete market cycle while maintaining a long-term focus is the most important characteristic of a successful…

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