What is a “401(k)” and how does it work?
Per Ameriprise Financial (2023), “A 401(k) is an employer-sponsored retirement savings plan that offers significant tax benefits while helping you plan for the future. With a 401(k), an employee sets a percentage of their income to be automatically taken out of each paycheck and invested in their account. Participants can choose how to allocate their…
Investment Strategy #7: Look to money market funds when interest rates are high
Stock mutual funds no longer have the potential for the greatest profits when the interest rates are high. Money market funds will not only give you the best return but will also be the safest investment since periods of high interest rates are when stock prices tend to fluctuate wildly and bonds decrease in value…
Investment Strategy #6: Aggressive growth stock funds
Investment Strategy #6: Aggressive growth stock funds Stock funds are a low-risk way to invest in the market. Thanks to diversity and professional management, you’re not likely to suffer big losses, even if you invest in areas that would be highly risky if you bought individual issues. Such funds offer the potential for high returns.…
How do the IRA rollover rules work to reduce my taxes?
The IRS is quoted (2022) as saying the following: Firstly – if you have not elected out of withholding, your plan administrator or IRA trustee will withhold taxes from your distribution. Then, if you later roll the distribution over within 60 days, you must use other funds to make up for the amount withheld. Additionally…
Investment Strategy #5: Pay yourself by buying no-load mutual funds
Did you know that mutual funds fall into two categories: load and no-load. With a load fund, you pay a sales charge up front, as much as 8.5%. Suppose you invest in a fund with a 5% front-load. For every $1,000 you put in, only $950 actually goes to work on your behalf. The other…
I’m looking for a second home at the beach and am wondering what “time-sharing” means.
Time-sharing is a real estate investment, usually one condominium unit, co-owned by as many as 25 investors. Each investor may use his/her unit during designated weeks chosen as part of the purchase. Time-sharing has a bad reputation because of developer defaults and bankruptcies. To combat the well-deserved negative publicity, developers have coined a new term,…
Investment Strategy #4: Use mutual funds for flexibility, variety, and liquidity
The mutual funds with which you’re probably familiar are called “open-end” because they are constantly buying and selling new shares. You purchase shares from the fund; you sell shares to the fund. The trading price is always the “net asset value per share”. In essence, all of a fund’s assets (chiefly, stocks, bonds, and cash)…
I sold my house. How long do I have to replace it and postpone tax on the gain?
The general rule is that you can postpone paying tax on capital gains from the sale of a principal residence if you buy a new one within 24 months before or after you sold the old one, and if the cost of purchasing a new residence equals or exceeds the adjusted sales price of the…
What are FHA and VA mortgages, and should I use them to purchase real estate?
Federal Housing Administration (FHA) and Veterans Affairs (VA) mortgages are guaranteed by these government agencies as a means of encouraging lenders to grant mortgage loans to middle class Americans and military veterans. FHA and VA mortgages are your best source of new home financing because qualification is easier than with conventional mortgages. In addition, the…
Investment Strategy #3: Invest in stocks, bonds, and money market instruments
Did you know that picking individual stocks or bonds is not easy? If you’re not a full-time investment analyst, you’ll wind up making mistakes through ignorance. Therefore, investors are better off putting their money into no-load mutual funds. You can make money in individual stocks but your chances are better with no-load funds. When you…