Not all investments make money and sometimes things don’t go quite like they were planned. This is the nature of Investment Risk.

In these cases to may become necessary to “clean out the attic” and get rid of some less than successful investment choices and trade them for some more promising choices.

Fortunately the IRS Tax Code (IRC) allows you to write off investment losses against investment gains in the year they are realized and even carry forward some of those losses to future years to reduce your Capital Gains Tax liability. In addition some of the investment losses can also be written off against your Income Tax liability.

However there are some somewhat complicated rules which may require some rather diligent recordkeeping.

Short-Term Gains and Losses and Long Term Gains and Losses

Short-Term Gains and Losses are for investments that are held for less than one year. They are taxed at your current Income Tax rate. Long Term Gain and Losses on investments held for more than a year are taxed at special Capital Gains rates. This is a matching game. Short-Term losses are deducted against Short-Term gains and Long-Term losses are deducted against Long-Term gains. Fortunately most of this information is sorted out and contained in the 1099 tax statement received each year from your Broker. Missing information should be contained in your own records, hence the need for diligent record-keeping. A good Financial Advisor should keep this on file for you.

Account Registrations?

Qualified Accounts – Qualified Accounts, such as an IRA or 401k, are accounts that are tax protected by the IRS. Typically income tax will be paid only when funds, including any investment gains, are distributed from the account. This means that Tax Loss harvesting doesn’t have much usefulness in these accounts since there is no Capital Gains Tax applied to these accounts.

Non-Qualified Accounts – These are accounts that are not tax-protected by the IRS. They are subject to Capital Gains taxes, Income Taxes, and Dividend Taxes. This is where most of our attention needs to be.

What’s the Catch?

Wash Sale Rules – So can you just sell an investment, book the tax loss, and then just immediately buy it back? Not quite. The IRS disallows the tax deduction if “the sale of stock or securities at a loss is within 30 days before or after you buy or acquire in a fully taxable trade, or acquire a contract or option to buy, substantially identical stock or securities.” (See IRS Pub. 550 for more details). So, watch the dates of the trades so you don’t get caught in this trap.

Tax Lot Selling

Professional Investment Managers should have sophisticated software that allows them to pick and choose which investment purchase (“lot”) to sell to realize the investment loss. This comes in handy when there are multiple purchases of an investment that occurred over a period of time at different prices. This may allow you to maximize the tax loss on the sale of your investment shares.

Tax Loss Carry Forwards

If you have a capital loss that is greater than what you can use for current year tax deductions the IRS allows you to carry it forward into future tax years.

An Extra Added Bonus

The IRS also allows you to use a capital loss deduction of up to $3000 of taxable income. This is a good way to potentially reduce your Income Tax liability in addition to your Capital Gains tax liability. This can also be carried forward to future year and applied again, up to the limit, until it is used up.

Conclusion

You can study more about tax management of your investments in our presentation on Tax Avoidance Strategies on our website www.SWRetire.com as well as learn more about our full service Financial Advisory practice. You should also consult your Tax Professional (CPA) to review your tax situation to ensure the most desirable outcome.

Views, opinions and analyses expressed in this presentation are those of Southwestern Retirement and not those of Independent Financial Group, LLC.

Registered Representative offering Securities and Advisory Services through Independent Financial Group LLC,

a Registered Broker-Dealer and Investment Adviser. Member FINRA/SIPC.

 Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC.

OSJ Address: 4041 MacArthur Blvd., Suite 240, Newport Beach, CA 92660

The post Tax Loss Harvesting appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

One of the advanced methods we can use for sophisticated investors is a Managed Futures Portfolio using several Professional Investment Managers that put together portfolios using specialized techniques to manage market volatility. These are considered to be “Alternative Investments” that are often used for diversification of an Investment Portfolio.

The Managed Futures Portfolio typically uses long or short positions in futures contracts (“derivatives”) in the U.S and Foreign Stock and Bond Markets. These portfolios may also invest a portion of their assets directly in Fixed Income Investments to generate returns and interest income and also to use as collateral in developing Managed Futures positions.

Our Managed Futures Portfolio managers use these derivative contracts instead of owning investments directly and trade them in the Futures Markets as opposed to the traditional Stock and Bond Markets. They may also trade in Commodities, Energy, Agricultural Markets as described in their portfolio strategy disclosures. Our Managed Futures Portfolio pulls together several of these managers to achieve a broadly based exposure to this investment strategy.

The performance of the Managed Futures Portfolio should show a low correlation to the Stock and Bond Markets and can be quite useful to diversify an investment portfolio. This positions them as effective hedge on investments but is a less expensive and more efficient approach than the rather expensive and opaque “Hedge Fund” used in the past. New regulations have made these portfolios more acceptable to sophisticated investors as a substitute for the traditional Hedge Fund.

These investments seek to achieve Capital Appreciation in both rising and falling (Bull and Bear) equity markets with a level of volatility that is generally lower than the historic level of volatility experienced by Global Stock Markets.

Conclusion

The Managed Futures Portfolio is considered as an Alternative Investment intended for use by sophisticated investors with substantial assets to invest to diversify their investment portfolio. All investing is subject to risk, including loss of principal, and past performance is no guarantee of future results.

You can learn more about our full service Investment Management and Financial Advisory practice at our website www.SWRetire.com  and see more investing ideas that may be useful to you.

Views, opinions and analyses expressed in this presentation are those of Southwestern Retirement and not those of Independent Financial Group, LLC.

Registered Representative offering Securities and Advisory Services through Independent Financial Group LLC,

a Registered Broker-Dealer and Investment Adviser. Member FINRA/SIPC.

 Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC.

OSJ Address: 4041 MacArthur Blvd., Suite 240, Newport Beach, CA 92660

The post Advanced Investment Strategies -Managed Futures appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

Laddered Portfolios can be made out of any group individual securities that have a fixed maturity. The intent is to remove interest rate risk by holding the securities to maturity thus eliminating price fluctuations that can be caused by changing interest rates. Other investment risks such default of the issuer or currency risk still remain. The risk of reinvesting the funds received at maturity at a lower rate also remains.

Typical Securities Often Used in Laddered Portfolios

Corporate Bonds – Generally have higher yields because of the perceived higher risk of the corporate issuer. Interest income is fully taxable at the Federal and State levels.

Municipal Bonds – Issued by State and Local issuing authorities. Yields are determined by the relative risk of the issuing authority. These bonds are exempt from Federal Tax and can be exempt from State tax if the taxpayer is a resident of that state.

U.S. Treasuries — Generally considered as the lowest risk security by the investment community. Interest income is taxable at the Federal level but tax exempt at the State level.

Certificates of Deposit (Fixed Rate) – Usually issued by Banks and Federal Deposit Institutions. These are principal protected by FDIC insurance up to certain amounts. Interest income is fully taxable.

Certificates of Deposit (Market-Linked) – These CDs are issued by Financial Institutions with access to the Stock Market. The yield is tied to stock market performance over a certain period instead of a fixed rate. Interest income can be more or less than a fixed rate CD depending on market performance. They are principal-protected, the minimum return is zero, and FDIC insured.

Mix and Match – It is also possible to put together several of these different types of securities in complimentary Ladders to take advantage of each of their unique characteristics. An example would be a mix of Fixed Rate CDs and Market-Linked CDs for an investor that wants to maintain some exposure to a rising market environment.

 Other Considerations

Risk Avoidance – Investors often use Laddered Portfolios to “park” cash if they do not choose to participate in the Stock or Bond Market but still would like to generate some interest income above Money Market rates.

Maturity Matching – Laddered Portfolios can be tailored to accrue interest and then generate free cash at very specific intervals.  The securities that make up the Laddered Portfolio are bought on the large secondary market where precise maturity dates can be chosen.

Liquidity Risk – The securities in a Laddered Portfolio usually can be sold or redeemed before maturity but this may expose the Investor to market price risk or redemption penalties. The key to this strategy working successfully is to hold the securities to maturity to avoid these risks.

Tax Equivalent Yield – It may be helpful to calculate a Tax Equivalent Yield in order to compare the tax liability of your interest payments of different types of securities which to build your Laddered Portfolio. This will help you make an “apples-to-apples” comparison of the actual income you would receive in comparing your different options. Your Financial Advisor or Tax Professional should be able to help you do this. 

Conclusion

Developing Laddered Portfolios may take sophisticated trading software to do properly. Investors may want to consider consolidating larger positions in order to avoid excess trading costs. You can learn more about Investment Strategies at our website www.SWRetire.com as well as learn more about our full service Financial Advisory practice.

Views, opinions and analyses expressed in this presentation are those of Southwestern Retirement and not those of Independent Financial Group, LLC.

Registered Representative offering Securities and Advisory Services through Independent Financial Group LLC,

a Registered Broker-Dealer and Investment Adviser. Member FINRA/SIPC.

 Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC.

OSJ Address: 4041 MacArthur Blvd., Suite 240, Newport Beach, CA 92660

The post Laddered Bond and CD Portfolios appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

There are many taxes levied by Federal, State, and Local Governments. Some of the more significant ones are listed below. In general, they fall into four major categories, Income Taxes, Payroll Taxes, Property Taxes and Consumption Taxes.

Some Significant Taxes Levied by U.S. Taxing Authorities

Income Tax                               Estate Tax                     Social Security Tax                    Property Tax

Capital Gains Tax                       Gift Tax                         MedicareTax                            Sales Tax

Dividend Tax                             Generation Skipping Transfer Tax

In this article we will concentrate on avoidance of the primary taxes involved with Investing:  Income Tax, Capital Gains Tax, and Dividend Tax. We can deal with the other taxes in future discussions.

Remember  … “Tax Avoidance is Legal, Tax Evasion is a Crime”

Income Tax regulations, formally known as the Internal Revenue Code (IRC), are set forth in Title 26 of the Code of Federal Regulations (CFR) also referred to as the U.S. Code. They have the force of law.

You are encouraged to take advantage of every method allowed in the IRC to reduce your tax liability but you are discouraged from using questionable methods to avoid responsibility for paying your fair share of taxes. This may put you in a difficult position with the Department of Justice which may prosecute you for breaking the law.

If you are in doubt please consult with a qualified Tax Professional, either a Certified Professional Accountant (CPA) or an IRS Enrolled Agent (EA), who should be able to give you sound guidance.

Account Registrations and Structures

Qualified Plans

They are “Qualified” by the Internal Revenue Code (IRC) which specifically defines their attributes that give them their special tax protected status. Plan numbers such as “401k” refer to the specific section in the IRC which defines that type of plan (i.e. Section 401, paragraph k).

The general purpose of these plans is to allow individuals to put away funds, including investment gains, that are Tax Deferred until they are distributed. Individual plans are non-employee plans where the contribution is a tax deduction on the individual Income Tax Return in the year it is contributed.  Defined Contribution Plans are for earned income that can consist of Employee contributions, in the form of salary for wage deferrals and Employer contributions in the form of matching contributions or profit sharing contributions. Defined Benefit Plans are funded solely by Employers and consist mostly of the traditional Pension Plans that we know of.

Roth IRAs are a special type of plan in which contributions are made after tax are paid but can be withdrawn as Tax Free, including investment gains, after the required minimum age is attained.

Some Common Qualified Account Types

Individual Plans                        Defined Contribution Plans                  Defined Benefit Plans

Traditional IRAs                        401k, 403b, 457 Plans                           Company Pension Plans

Rollover IRAs                            SEP, SIMPLE, SARSEP Plans                    Government Pension Plans

Beneficiary IRAs                        Profit Sharing Plans                               Union Pension Plans

Spousal IRAs

Roth IRAs

529 College Savings Plans – Contributions are made with after-tax funds but can be distributed Tax Free, including investment gains, if they are made for IRC qualified expenses (tuition and fees).

Health Savings Accounts (HSAs) – Contributions are made with before-tax funds for individuals with high deductible Health Care Plans but can be distributed Tax Free, including investment gains, if they are made for IRC qualified health care expenses.

Charitable Remainder Trusts – Highly appreciated assets can be donated to Charity with a deduction for their full value in exchange for a lifetime income. This technique can convert a large, current capital gains tax liability to an income tax liability and stretch it over a long period That is Tax Deferred.

Irrevocable Life Insurance Trusts (ILITs) – are used to for Estate Tax avoidance for large estates. It essentially gifts current tax premiums and multiplies those into a future insurance Death Benefit which will pass Tax Free to the beneficiaries.

Transactional Techniques

Tax Loss Harvesting.  Not all investments make money. However The IRC allows individuals to take a Tax Deduction for investment losses against investment gains in the year they are sold as well as some income. A professional Investment Manager should be able to identify and maximize these opportunities through sophisticated portfolio management software.

Donation of Appreciated Stock.  Investors can attain concentrated positions in highly appreciated stock, which they are discouraged from selling because of a significant tax liability associated with the sale.  The IRS allows the individual to donate the stock to a qualified charitable institution and take a large charitable Tax Deduction of the entire market value of the stock including the capital gain. This may calculate out to a better financial outcome than paying the capital gains tax on the appreciated value. It is also certainly better than donating cash to charity because of the capital gains tax avoidance feature.

Product Type Characteristics

Certain investment types have their own unique tax avoidance features:

Municipal Bonds – Interest payments are Tax Free at the Federal level and but also at the State level if the investor files tax returns in that state.

Qualified Dividend Income – Dividends from IRC qualified investments are taxed at a Flat Rate of 15% which may be far less than the tax rate paid by Investors with higher incomes.

Real Estate – has the advantage of depreciation deductions that can be taken against income which can decrease the tax liability. This tax protection also extends to Real Estate Investment Trusts (REITs), Limited partnerships, and other fractional ownership programs. This makes the investment income Tax Deferred. This depreciation deduction may have to be recaptured when the property is sold however this can be avoided for some properties by using a 1031 property exchange to a new investment property which can further defer the tax liability.

Annuities – have special tax advantages in the IRC which allows investment gains to be Tax Deferred until distributions are made from the Annuity. Annuities also come with features that can guarantee either future Income Benefits or future Death Benefits. Income Tax free transfers to better Annuities are also allowed.

Life Insurance – also have special tax benefits which allow gains in the contract to accumulate tax-free. Death benefits from Life Insurance policies are Tax Free but may be subject to Estate tax.

 Conclusion

Tax Avoidance strategies take careful planning and construction to work effectively. You should seek out a qualified Financial Professional (CFP) and consult your Tax Professional (CPA) to help ensure the most desirable outcome.

Read More About Our Service

Views, opinions and analyses expressed in this presentation are those of Southwestern Retirement and not those of Independent Financial Group, LLC.

Registered Representative offering Securities and Advisory Services through Independent Financial Group LLC,

a Registered Broker-Dealer and Investment Adviser. Member FINRA/SIPC.

 Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC.

OSJ Address: 4041 MacArthur Blvd., Suite 240, Newport Beach, CA 92660

The post Tax Avoidance Strategies for Investors appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

Most of these people majored in English or Journalism, not Finance. They give general advice targeting a general audience. There is no attention paid to your specific situation or wants needs, and desires. You need to sit down with a professional Financial Advisor to properly address those concerns.

Retiring without Liquidity or Diversity

“Don’t put all your eggs in one basket” … Yes, they were talking about your investments too. You need to address any number of possible market situations and personal situations and make sure to have funds readily available to deal with them.

Living on the Interest without Touching Principal

This locks you in to one distribution strategy that may not be appropriate under every circumstance. Some prudent management of multiple sources of income may give you more flexibility in dealing with changing circumstances.

Retiring without any Real Goals

If you have no idea what you want to do with the rest of your life it will be difficult to determine what your needs will be.  This kind of uncertainty can be troubling.

Assuming you will be in a Lower Tax Bracket when you Retire

This assumes that Congress would never raise taxes. This may not be a reliable assumption.

Trusting a Calculator to tell you When to Retire

“Retirement Calculators” are designed for a general audience and may give you a general idea of what you may need. They also give very little direction on how to provide sufficient retirement income to meet your needs.

Retiring early only to Reduce your Social Security Benefit

Taking Social Security benefits early but needing a part-time job to fill the gap may cause the benefit to be reduced as well as permanently losing increased benefits available to you by delaying retirement.

Drawing Income form the Wrong Assets

If you have choices between multiple streams of income, which when should you choose and in what proportion? You may need to consider many factors including Taxation, Liquidity, Reliability, and Returns. A detailed analysis may be a good idea.

Choosing the Wrong Beneficiary

When you pass away, who will receive your remaining wealth? IRAs, Pensions, Life Insurance policies, Annuities and other financial instruments may all have beneficiary designations that need to be reviewed periodically to make sur e that they are up to date and align with your intentions.

Retiring without Estate or Insurance Planning

How do you protect the transfer against “Creditors and Predators”? How do you avoid taxation? How do you avoid Probate? You may want to consider careful Estate Planning to make sure your financial affairs are in order before that time.

Retiring on Hope

You should have an idea of what your expenses will be in retirement, how much you will need to save, when you can afford to retire, and how long your savings should last.

Ignoring Inflation

Prices for goods and services don’t stay the same. They may increase over time, especially Health Care costs, which have been rising faster than most other costs. You usually need more Health Care as you get older.

Making Seat-of-Your-Pants Money Decisions

What looked good today may not look so good tomorrow. One bad mistake can damage your retirement plans badly. Getting experienced, objective advice from a professional Financial Advisor can help you make more informed decisions.

Handing your Heirs Tax Problems

Proper Estate Planning can help ensure that your heirs maximize their inheritance instead of passing it along to the Government in the form of taxes.

Dismissing the Need for Long-Term Care

Contrary to popular belief, Medicare does not cover much on Long-Term Care expenses. You will have to come up with most of the funds yourself. Have you planned for this?

Being Talked into the Wrong Investments

Are you being sold a particular investment or are you being provided with options that are appropriate for your situation. You should insist on financial advice that is based on what is in your best interest.

Losing a Big Chunk of your Retirement Money in One Wrong Move

There are many decisions to make on moving money around at retirement including distributions options and rollovers. These need to be done properly to maximize your retirement benefits and to avoid undesirable outcomes.

Thinking Tomorrow will be just like Today

Past performance is not an indicator of future results. You may need to periodically reposition assets to address liquidity, stability, and income needs.

Retiring without an Investment Strategy

Investing in Retirement can be far different than investing before Retirement. You will be living off of savings during Retirement instead of trying to grow your portfolio. This needs a new strategy to be considered.

Set Goals as you Save and Invest

What are you trying to accomplish? Fund Retirement? Save for College? Build an Emergency Fund? Saving and investing based on well-defined goals can give you more focus on strategy and planning activities necessary to achieve your desired outcomes.

Conclusion

Proper planning can help you avoid mistakes that can lead to undesirable outcomes. You should meet with an experienced Financial Advisor to get some help. You can also get some more detailed information on this topic by requesting a free copy of our eBook “20 Retirement Mistakes Retirees Make and How to Avoid Them”  by emailing to info@SWRetire.com.

Read More About Our Service

Views, opinions and analyses expressed in this presentation are those of Southwestern Retirement and not those of Independent Financial Group, LLC.

Registered Representative offering Securities and Advisory Services through Independent Financial Group LLC,

a Registered Broker-Dealer and Investment Adviser. Member FINRA/SIPC.

 Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC.

OSJ Address: 4041 MacArthur Blvd., Suite 240, Newport Beach, CA 92660

The post 20 Retirement Mistakes to Avoid appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

• Real Estate is probably the most commonly held Alternative Investment. It can be held as Direct Ownership where title is held directly by an individual such as a rental home, or Fractional Ownership as a share in a Real Estate Investment Trust (REIT), or Partnership along with other investors. Although some REITs are actually traded in the Stock Market (“Traded REITs”) most actually started their lives as private offerings to investors outside of the market (“Non-traded REITs”). Common Real Estate categories include Residential, Office, Retail and Warehouse/Industrial.
• Life Insurance and Annuities. These are actually contracts that are made between an individual or special entity and a Life Insurance or Annuity company. Annuity contracts are set up with fixed or variable return rates based on various market returns. The contract benefits usually fall into two broad categories, Living Benefits, associated with Income payouts, or Death Benefits, associated with lump sum payouts. These benefits are guaranteed by the company issuing the contract. This guarantee can relieve and Investor of some of the market risk in stock or bond investing. A way to understand this investment market it is to realize that Annuity contracts often consist of a large current payment (the “Premium”) to the issuing company in exchange for a stream future payouts (the “Benefit”) to the Investor. Conversely, Life Insurance contracts consist of a current stream of Premium payments in exchange for a large lump-sum Benefit payout in the future. The issuing companies simply make their profit on the spread between these current premium payments and the payout of future benefits.
• Hedge Funds and Futures Contracts.  These are more sophisticated investment vehicles that involve contracts written against market performance, arbitrage on mergers and acquisitions in the market as well as foreign currencies. Arbitrage is the practice of taking advantage of valuations that are perceived as mispriced in the market.  They often involve smaller high-risk investments that are targeted for outsize returns.
• Commodities and Currencies. Typical commodities are of Oil and Gas, Precious Metals (i.e. Gold or Silver), Base Metals (i.e. Copper or Aluminum), Agricultural Products (i.e. Wheat or Soybeans). They can be held directly (i.e. Gold Coins) or they often take the form of futures contracts that are traded in the own unique markets that may or may not be correlated to the Stock and Bond Markets. One of the newer investment vehicles that may fit into this category are cryptocurrencies such as Bitcoin. This is could be considered as an undeveloped market that is highly speculative and volatile.
• Private Debt and Private Equity. One of the newer investment vehicles is the private placement of debt for mid-sized companies that too large to borrow from banks and too small for a debt offering in the Bond Market. Business Development Companies (BDCs) organize these offerings and sell them privately to sophisticated investors through the Broker/Dealer network. There are also offerings organized to pool investor funds and invest in start-up or later-stage financing of growing companies looking to raise equity privately.
• Conclusion. Alternative Investments are a good way to diversify and round out an Investment Portfolio without further exposure to Stock and Bond Markets. They are often used to dampen volatility (market price swings) and stabilize of a portfolio to smooth out investment returns. Many Alternative Investments also produce regular cash payments that may greater than the Bond Market but can be obtained with less risk. They should be considered as part of a sophisticated Investment Portfolio. Some of these Alternative Investments can only be obtained through a full service Financial Advisor.

Read More About Our Service

Views, opinions and analyses expressed in this presentation are those of Southwestern Retirement and not those of Independent Financial Group, LLC.

Registered Representative offering Securities and Advisory Services through Independent Financial Group LLC,

a Registered Broker-Dealer and Investment Adviser. Member FINRA/SIPC.

 Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC.

OSJ Address: 4041 MacArthur Blvd., Suite 240, Newport Beach, CA 92660

The post Alternative Investments appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

Your first move should be debt reduction. This frees up money for the other moves you can make and lessens the amount of money you pay to others, instead of yourself, each month.

Consider attacking your highest-interest debts first rather than your largest debts. If you have big credit card balances, high-interest car loans, or similar financial obligations, that borrowed money may be extremely expensive. Credit bureau Experian says that monthly household credit card balances in this country hover around $6,375. According to personal finance website NerdWallet, the average interest rate on a credit card right now is 14.87%, and the average U.S. household pays out $904 a year just in credit card interest. A constant debt of $6,000 is bad enough, but having to pay roughly another $1,000 a year just for the opportunity to borrow? That really hurts.1

Whether your major debts are larger or smaller, think of the progress you could possibly make by devoting thousands of dollars you pay to others to yourself. Say you direct $3,000 you would otherwise pay to creditors during a year into an investment account returning 6%. Say you do this for 10 consecutive years. At the end of that 10-year period, you are looking at $47,287, not simply $30,000. That is what compound interest – the best kind of interest – can do for you financially.2

Across longer time periods, compound interest has a proportionately greater positive effect. Stretch the above example out to 35 years and those annual $3,000 investments at a 6% return grow to $377,421. (Keep in mind, you may be able to save and invest considerably more than $3,000 annually as you earn more money per year.)2  

Save or invest whatever you can. Setting aside a little cash for yourself is good, too. You want to build some kind of emergency fund with money you can touch; money you can get at right away if you need it quickly.

Many retirement savings vehicles offer you tax breaks. The common workplace retirement plan or IRA is tax favored: money within the account grows tax free, and it is subtracted from your paycheck before taxes. You only pay taxes on the money when it is withdrawn. In addition, many employers will partially match your contributions if you meet a certain minimum. Roth IRAs and workplace plans allow both tax-free growth and tax-free withdrawals, provided Internal Revenue Service rules are followed. While you get no up-front tax break for contributing to a Roth account, you also have the potential to withdraw the money tax free for retirement, which is a great thing.3

Not using these saving and investing accounts could be a big mistake. Some people are skittish about Wall Street investments, but largely speaking, those are the kinds of investments that have the potential to return better than 5% a year (think about the scenario from a few paragraphs earlier). In fact, the S&P 500, the broad benchmark of the stock market, gained an impressive 19.42% last year.4

Parking too much money in cash and avoiding all risk can come with an opportunity cost you may not be able to afford. Sallie Krawcheck, the former president of the investment management division of Bank of America and CEO of Ellevest, estimates that a woman making $85,000 annually who puts 20% of her yearly pay into a bank account rather than an investment account could effectively forfeit more than $1 million after four decades of doing so.5

Now is the ideal time to plan to get ahead financially. Think about your future, and make the wise money moves that give you the potential to make it bright.

Kurt Rohrs may be reached at (480) 812-8640 or kurtrohrs@SWRetire.com

Southwestern Retirement Planning Advisors, Inc.

3800 S. Alma School Road, Suite 123

Chandler, AZ 85248

www.SWRetire.com

Registered Representative offering securities and advisory services through Independent Financial Group LLC,

a registered broker-dealer and registered  investment adviser. Member FINRA/SIPC

Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC

OSJ Branch: 4041 MacArthur Blvd. Ste. 240, Newport Beach, CA 92660

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – tinyurl.com/ybxskou6 [2/19/18]

2 – bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx [2/22/18]

3 – fool.com/retirement/2017/05/20/taxable-vs-tax-advantaged-savings.aspx [5/20/17]

4 – ycharts.com/indicators/sandp_500_return_annual [2/22/18]

5 – money.cnn.com/2017/03/08/pf/financial-moves-sallie-krawcheck/ [3/8/17]

The post Wise Money Moves Young Women Can Make appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

Nearly everyone can save something. Even small cash savings may be the start of something big if they are invested wisely.

Sometimes, the immediate wins out over the distant. To young adults, retirement can seem so far away. Instead of directing X dollars a month toward some far-off financial objective, why not use it for something here and now, like a payment on a student loan or a car? This is indeed practical, and it may be necessary. Even so, paying yourself first should be as much of a priority as paying today’s bills or paying your creditors.

Some workers fail to enroll in retirement plans because they anticipate leaving. They start a job with an assumption that it may only be short term, so they avoid signing up, even though human resources encourages them. Time passes. Six months turn into six years. Still, they are unenrolled. (Speaking of short-term or transitory work, many people in the gig economy never get such encouragement; they have no access to a workplace retirement plan at all.)

Other young adults feel they have too little to start saving or investing. Maybe when they are further along in their careers, the time will be right – but not now. Currently, they cannot contribute big monthly or quarterly amounts to retirement accounts, so what is the point of starting today?    

 The point can be expressed in two words: compound interest. Even small retirement account contributions have potential to snowball into much larger sums with time. Suppose a 25-year-old puts just $100 in a retirement plan earning 8% a year. Suppose they keep doing that every month for 35 years. How much money is in the account at age 60? $100 x 12 x 35, or $42,000? No, $217,114, thanks to annual compounded growth. As their salary grows, the monthly contributions can increase, thereby positioning the account to grow even larger. Another important thing to remember is that the longer a sum has been left to compound, the greater the annual compounding becomes. The takeaway here: get an early start.1  

 Any retirement saver should strive to get an employer match. Some companies will match a percentage of a worker’s retirement plan contribution once it exceeds a certain level. This is literally free money. Who would turn down free money?  

Just how many Americans are not yet saving for retirement? Earlier this year, an Edward Jones survey put the figure at 51%. If you are reading this, you are likely in the other 49% and have been for some time. Keep up the good work.2

Kurt Rohrs may be reached at (480) 812-8640 or kurtrohrs@SWRetire.com

Southwestern Retirement Planning Advisors, Inc.

3800 S. Alma School Road, Suite 123

Chandler, AZ 85248

 Registered Representative offering securities and advisory services through Independent Financial Group LLC,

a registered broker-dealer and registered  investment adviser. Member FINRA/SIPC

Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC

OSJ Branch: 4041 MacArthur Blvd. Ste. 240, Newport Beach, CA 92660

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx [6/21/18]

2 – forbes.com/sites/kateashford/2018/02/28/retirement-3/ [2/28/18]

The post Why Do People Put Off Saving for Retirement? appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

Last year, a GoBankingRates poll discovered that 57% of U.S. households had less than $1,000 in deposit accounts (although, 25% reported having at least $10,000). A 2017 analysis from Moebs Services, a research firm consulting banks and credit unions, noted that the average U.S. checking account contained around $3,600.1,2    

Eyeing these numbers, you get the sense that – in an emergency – most households have less than a month before their liquid savings run out. Is this true for your household? Hopefully, your cash reserve is much larger; if that is not the case, now is as good a time as any to bolster your emergency fund.

Building up an emergency fund may be easier than you think. As financial upsets are thankfully infrequent, you have long periods of normalcy in which you can amass cash. Can you save $50 a month toward that goal? You will have $600 after 12 months if you do or $1,200 in 12 months if your spouse saves along with you. That may not seem like much, but even that little pool of cash could suffice.

Keep in mind, the whole goal of an emergency fund is to deal with sudden – and presumably acute – expenses. In the grand scheme of things, these emergency costs will likely be trivial compared to the total expense of your retirement. If you end up directing more of your money to your retirement fund than your emergency fund per month, who can blame you? Your retirement fund is presumably invested in equities and has the chance to grow and compound over time. It addresses what is arguably your top financial need – the need to provide yourself with financial stability after you end your career.  

Some households need larger emergency funds than others. A high-earning, child-free couple living without much debt in a relatively inexpensive metro area might need one to absorb only 3-4 months of expenses. A family reliant on one paycheck might need one that is much larger, as severe financial trouble could surface if the breadwinner loses a job or falls ill.    

Emergency funds can also help in other kinds of money crises. While an emergency is an unexpected event calling for an immediate response, you may be able to sense other financial disruptions and inconveniences coming. Maybe that garage door keeps malfunctioning or your eight-year-old computer has trouble booting up. These are signals that you will need to write a check or pull out that debit card soon.

Living without an emergency fund can invite worry. It is an anxiety too many households have had to accept. Plan to save a little each month (or more than a little, if you can manage), so that you may create a bit more financial “breathing room” in your life.   

Kurt Rohrs may be reached at (480) 812-8640 or kurtrohrs@SWRetire.com

Southwestern Retirement Planning Advisors, Inc.

3800 S. Alma School Road, Suite 123

Chandler, AZ 85248

www.SWRetire.com

Registered Representative offering securities and advisory services through Independent Financial Group LLC,

a registered broker-dealer and registered  investment adviser. Member FINRA/SIPC

Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC

OSJ Branch: 4041 MacArthur Blvd. Ste. 240, Newport Beach, CA 92660

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.        

Citations.

1 – cnbc.com/2017/09/13/how-much-americans-at-have-in-their-savings-accounts.html [9/13/17]

2 – tinyurl.com/yacqwq4p [7/13/17]

The post What Do You Have in Reserve for 2018? appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.

Direct a bit of your pay into an emergency fund. Just a little cash per paycheck. Gradually build a cash savings account that can come in handy in a pinch.

 Speaking of emergencies, remember health insurance. Without health coverage, an accident, injury, or illness represents a financial problem as well as a physical one. Insurance is your way of managing that financial risk. A grace period does come into play here. If your employer does not sponsor a health plan, remember that you can stay on the health insurance policy of your parents until age 26. (In some states, insurers will let you do that until age 29 or 31.) If you are in good health, a bronze or silver plan may be a good option.1,2

 Set a schedule for paying off your college debt. Work toward a deadline: tell yourself you want to be rid of that debt in ten years, seven years, or whatever seems reasonable. Devote some money to paying down that debt every month, and when you get a raise or promotion, devote a bit more. Alternately, if you have a federal college loan balance that seems too much to handle, see if you qualify for an income-driven or graduated repayment plan. Either option may make your monthly payment more manageable.3

 Watch credit card balances. Use credit when you must, not on impulse. A credit card purchase can make you feel as if you are buying something for free, but you are actually paying through the teeth for the convenience of buying what you want with plastic. As Bankrate.com notes, the average credit card now carries a 16.8% interest rate.4

Invest. Even a small retirement plan or IRA contribution has the potential to snowball into something larger thanks to compound interest. At an 8% annual return, even a one-time, $200 investment will grow to $2,013 in 30 years. Direct $250 per month into an account yielding 8% annually for 30 years, and you have $342,365 three decades from now. That alone will not be enough to retire on, but the point is that you must start early and seek to build wealth through one or more tax-advantaged retirement savings accounts.5

 Ask for what you are worth. Negotiation may not feel like a smart move when you have just started your first job, but two years in or so, the time may be right. It can literally pay off. Jobvite, a maker of recruiting software, commissioned a survey on this topic last year and learned that only 29% of employees had engaged in salary negotiations at their current or most recent job. Of those who did, 84% were successful and walked away with greater pay.6

Of course, you also have the power to negotiate your pay when you change jobs. That ability is not always acknowledged. Robert Half, the staffing firm, recently hired independent researchers to poll 2,700 U.S. workers employed in professional environments. The pollsters found that just 39% of these workers attempted to negotiate a better salary upon their most recent job offer. The percentage was higher for men (46%) than for women (34%).7     

Financially speaking, your twenties represent a very important time. Too many people look back over their lives at fifty or sixty and wish they had been able to save and invest earlier. These are the same people who may face an uncertain retirement. Rather than be one of them years from now, do things today that may position you for a better financial future.  

Kurt Rohrs may be reached at (480) 812-8640 or kurtrohrs@SWRetire.com

Southwestern Retirement Planning Advisors, Inc.

3800 S. Alma School Road, Suite 123

Chandler, AZ 85248

www.SWRetire.com

Registered Representative offering securities and advisory services through Independent Financial Group LLC,

a registered broker-dealer and registered  investment adviser. Member FINRA/SIPC

Southwestern Retirement Planning Advisors, Inc. is not affiliated with Independent Financial Group LLC

OSJ Branch: 4041 MacArthur Blvd. Ste. 240, Newport Beach, CA 9266

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – tinyurl.com/y7nne8bd [11/7/17]

2 – money.cnn.com/2017/10/20/pf/health-insurance-first-time/index.html [10/21/17]

3 – fool.com/investing/2018/03/22/your-2018-guide-to-federal-student-loan-repayment.aspx [3/22/18]

4 – bankrate.com/finance/credit-cards/current-interest-rates.aspx [4/5/18]

5 – investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator [4/5/18]

6 – cnbc.com/2017/05/25/most-employees-dont-negotiate-their-salary.html [5/25/17]

7 – smallbiztrends.com/2018/02/salary-negotiation-statistics.html [2/8/18]

The post Smart Financial Steps After College appeared first on Southwestern Retirement Planning Advisors - Retirement Planning Chandler, AZ.