Do you have an investment-related question you want me to address? Email me at brock@hylinewealth.com, and it might be my next blog post.
Sequence of investing matters. Knowing where you should be investing your money first and what accounts you should be making a priority over others are critical factors in determining your overall financial success.
An HSA may allow you to save for future health related expenses with maximum tax efficiency. HSAs offer what's known as a triple tax benefit: tax deductible contributions, tax-deferred growth, and tax-free withdrawals as long as the money is used for qualified medical expenses.
A College 529 Plan may allow you to fund your child(s) or grandchild’(s) education with increased tax efficiency...tax-free growth if used properly.
The broad US stock market has recovered from every correction in its history, no matter how big or small the correction. With a little discipline and some planning, you can take advantage of the next stock market correction by increasing your IRA and/or retirement plan (401k, etc) contributions, doing a timely IRA conversion, and/or "buying the dip". You can embrace the volatility and make it your best friend.
The 2018 tax cuts are NOT permanent. An IRA conversion is one way to take advantage of these lower rates. By doing an IRA conversion now, you are choosing to pay the taxes on your IRA based on the current tax brackets, essentially locking in these lower rates. Then, if/when tax rates go back up, it won't matter because the IRA assets you convert will then be in your tax-free Roth IRA account. Timely IRA conversions like this might save you a significant amount on taxes over the life of your IRA(s). Unless you like paying taxes, that's a good thing.
The Backdoor Roth IRA Strategy may allow you to accumulate a significant amount of money in a tax-free Roth IRA, regardless of your income. Unless you like paying taxes, that's a good thing.
We bring you ideas. We use strategies and tax-efficient accounts that make a difference. And we make it a priority to keep your total cost of investing relatively low. That's what we do.
A fiduciary advisor is required by law to act in your best interest. If it were my money, I would want to know that my "investment person" is required by law to act in my best interest.
With old retirement plan accounts (401k, etc), consider several factors before you roll over your 401k account to an IRA. For some, there are many reasons to roll over your 401k to an IRA. For others, you might want to leave your 401k where it's at.
A Donor-Advised Fund (DAF) account can make your charitable giving easy, flexible, and tax-efficient.
Know your total cost of investing. According to research done by Morningstar, fund fees predict future success or failure…and the expense ratio is the most proven predictor of future fund returns. In other words, the lower your costs, the better your future returns are likely to be. Make sure your financial advisor is adding value to your financial situation at a fair and reasonable price, and if they're not, find an advisor who does.
If you have an employer who provides matching contributions AND you max out your 401k plan BEFORE the end of the year, be careful. Make sure you aren't missing out on some of your employer's matching contributions. Because matching contributions are like receiving free money.
Index ETFs offer many benefits such as low cost, tax efficiency, trading flexibility, diversification, and most likely, better performance. These are all very important factors in determining your long-term investment success.
Buying stock at a 15% discount is generally a pretty good deal. It’s kind of like receiving free money. But make sure you know and understand your concentration risk. If you get too concentrated (over 10-20% of your total investments), you should consider selling shares.
Even if you are close to retirement or in the highest tax bracket, the Roth 401k might still be a better option for you than the regular 401k.