If you were sent back in time 40 years and had the option of either investing $100 in the S&P 500 every month for the next 40 years (dollar cost averaging) or saving $100 each month and, having the ability to know when the market was at an absolute bottom between two all-time highs, only invested when the S&P 500 was in a dip (buying the dip), which approach would you be better off choosing? The prevailing wisdom is that buying the dip is superior – but, according to a recent study, that prevailing wisdom is wrong. For more, CLICK HERE.
Savings
Roth Or Not? A Framework For Making The Roth vs. Traditional Retirement Account Decision
It’s a decision that pretty much anyone saving for retirement faces: should you use a Roth account or a traditional account? The author of today’s article argues that more people should probably be using traditional accounts, but states that “Before you can understand why it likely makes more sense to use a traditional retirement account versus a Roth account, you must first understand the difference between marginal tax rates and effective tax rates.” For more – including the exceptions when the author believes people may be better off using a Roth – CLICK HERE.
The Importance Of – And How To Achieve – Income Alpha
In the quest to achieve alpha in the markets, don’t neglect the importance of achieving alpha with your income, advises the author of today’s article. He states that “saving more is often your best investment decision and the best way to supercharge your savings is to earn more money” – and provides a simple example to show just how big of an impact saving part (or all) of a raise can have on your bottom line. But how can you go about securing that raise in the first place? The author outlines some considerations in that regard – and what you can do even if your efforts are unsuccessful. CLICK HERE.
Coverdell ESAs: The Tax-Sheltered Account Few People Realize Exists
“Don’t underestimate the benefit of this tax shelter,” urges the author of today’s article in his discussion of the Coverdell Education Savings Account – an account that functions much like a Roth IRA and from which distributions are tax-free as long as the funds are for expenses related to schooling. There’s still time to open one for the 2016 tax year, so to read more about Coverdell ESAs – including who can have one, who can contribute to one, and how much you can sock away in any given year – CLICK HERE.
Why This “Do-Over” Tax Trick May Prove To Be Particularly Useful This Year
“It’s about the only tax do-over you can get,” states today’s article of the tax trick highlighted. The trick in question? Converting a traditional IRA (and its pre-tax savings) to a Roth IRA (with after-tax savings) – a conversion that comes with the option to change your mind and undo it. The author notes that this do-over option might be particularly useful this year as Washington works on tax reform “that could wipe out the advantages of a conversion or make it cheaper to convert in another year or two rather than now.” To read more about Roth IRA conversions and the mechanics of a do-over, CLICK HERE.
Securing Your Financial Future In Your 40s
“The kids are old enough to drive themselves to band practice, and you’re planning an anniversary getaway with your spouse. Life is good. But college bills loom, and you’re neglecting your retirement accounts as you sock away money for college.” Today’s article outlines “4 aggressive moves” you can make in your 40s to help achieve long-term financial security. Why does the author recommend starting contributions to a Roth IRA if you haven’t already? Why might putting off saving for retirement in favor of helping to finance your children’s college education be a bad idea? Why might it be wise to ensure you remain (or become) “technologically nimble”? CLICK HERE to read more.
Save $1 Million With Minimal Sacrifice?
“It’s no secret that Americans need to save more. The issue – at least in part – is that saving requires sacrificing some of today’s wants in favor of tomorrow’s needs.” Would you like to save $1 million with minimal sacrifice? Is that even possible? Today’s article outlines one approach where it might be: saving future income. Specifically, the author highlights one analysis which involved saving half of every raise and all of each annual bonus, leading to the $1 million outcome. To read more about this strategy, including how you can give yourself a raise even if you don’t get one from your boss, CLICK HERE.