How To Choose An Investment Account For Retirement

Chart of the week: Build a retirement income portfolio based on ability and willingness to take risk. It's one of the most frequent questions I'm asked... How should I investment my portfolio earmarked for retirement just prior to or during retirement? It comes up all the time, but particularly during times of market or economic stress when uncertainty about the performance of stocks rises. Stocks are still critical in a retirement portfolio, for most investors. But so are more stable investments, in our view, including cash, short-term reserves/investments, and bonds. You could use a general 60 percent stock, 40% bonds and cash "guideline." Or you could personalize your approach. I suggest the latter. The question to ask is... How much money may I need soon, from your investments? This requires creating either an assessment of how much you've been spending, or how much you plan to spend, as well as accounting for other potential income sources such as Social Security, annuity, pension, part-time work, or other sources. 1️⃣ Once you've done this calculation, considering set aside a year of what you'll need over and above those sources of income from your portfolio into cash investments such as a yield-bearing money market account. Spend from this account. 2️⃣ Then, multiple the amount by somewhere between 2 and 4, depending on your tolerance for investment risk. Keep that amount, equal roughly to 2-4 years of withdrawals, in steady investments to provide liquidity (meaning not just the ability to sell the investment, but do it at a price that's not highly dependent on the economy or market) and stability to whether a bear market and/or fund spending if needed from the portfolio. 3️⃣ Last, create and invest a long-term portfolio that includes stocks and bonds based on your risk tolerance and time horizon. This provides growth potential and funds future spending. Consider an example... What if you plan to withdraw about 5% from your portfolio next year and spend about the same amount per year in the next 2-3 years without much change in your income sources? Working backward, using the personalized steps above, this brings you close to a "traditional" 60/40 stock/bonds & cash portfolio used as a rule of thumb for retirement. But on your terms, based on your needs. The chart below provides an illustration. If you need help, as always complete a personalized plan and work with a professional retirement planner and advisor. #retirementportfolio #financialplanning #risktolerance #riskcapacity

During annual reviews and meetings with new prospective families, I have been reviewing a plethora of 401k plans and documents. I wanted to share my 4 BIG takeaways and provide potential real-life next steps for you to consider. ☑ Don’t Save Too Fast In almost every other area of life, saving and investing more is encouraged. With an employer-sponsored retirement plan, that is not always the case. In many plans, you only get your employer match during the period you make contributions. In other words, if you max out your plan before the final paycheck of the calendar year, you could be forfeiting a portion of the employer match. You must understand your employer's plan. Fortunately, every plan must make a plan document available to you upon request. Your plan provider can provide a wealth of insight with a simple phone call. ☑ Beneficiary Designations While this one might seem obvious, mistakes happen way too often. Find the beneficiary tab of your employer plan online and confirm you have the correct beneficiaries. Common mistakes: parent instead of a spouse, ex-spouse, minor children ☑ Breaking Up with Your Target Date Fund For most employer-sponsored retirement plans, your investment contributions go to a target date fund by default. This is based on the year that you turn 65. For example, if you were born in 1980, your default investment option might be the ABC Target Date 2045 Fund. I do not think a person’s age should determine how their investments should be allocated. On average, I see that the average expense ratio in large employer plans is generally 0.40 to 0.45%. Inside the TDF, the fund allocates the funds to a combination of U.S. and International Stocks, Bonds, and cash. If you have a written financial plan, it should detail the investment asset allocation to help you optimally pursue funding your dreams. This could often be achieved by selecting 3-5 index funds without your 401k lineup. I see that passive index funds have an average expense ratio of 0.05%. ☑ Rebalance and Redirect When changing from target-date funds to your own mix of index funds, there are essentially 3 critical steps. First, you need to rebalance your existing holdings to the desired mix. Second, you need to re-direct future contributions to the desired mix. Finally, you need to select a date to do an annual rebalance. Hopefully, the plan provider will have an option for you to select to make this happen automatically. ★ Conclusion In a recent Vanguard study, Vanguard attempted to quantify the value of advice. They suggest that financial planners can add .45% of value by recommending low-cost index options and .35% for rebalancing. Hopefully, by reading this post, you improved your lifetime annual returns by 0.80% per year. Cheers, Nic #National401kDay

People hate to pay taxes. I can't blame them and we know that taxes will go up. Here's 3 ways to address taxes now and in the future. We know that 1/1/2026 the Tax Cuts and Jobs Act will expire. Taxes will go up slightly. But what a lot of people don't realize is that taxes are near historic lows in many cases. The real worry I hear about is taxes going up not only in the near future but in retirement as well. 3 ways to navigate taxes and investing today and tomorrow: 1. Non-Retirement brokerage account - There is different tax treatment for different types of accounts. Accounts like these are taxed on dividends, income and gains today but if you hold a position for over a year you're taxed at capital gains rates at the federal level. -0% -15% -20% On the gain. Just be careful of positions held for less than a year they are taxed at ordinary income tax rates.  More on that below. 2. Traditional Retirement accounts - Think -Traditional IRA -Traditional 401k These can be great accounts to save on taxes now depending on your tax bracket. Current Ordinary Income Tax Brackets -10% -12% -22% -24% -32% -35% -37% See the full breakdown in the image attached. The tax consideration here is that when it comes time to distribute your investments - distributions will be treated as ordinary income. 3. Roth Retirement Accounts Think -Roth IRA -Roth 401k Pay taxes now but distributions in the future are tax free. There is nuance here that I can get into in another post. Thoughts: We don't know where tax rates will be or when they will change over time. It's not clear what tax bracket you'll be in at different stages of your life. That's why I talk about making financial plans and including tax planning. -Should you put everything in Roth? -Everything in traditional? -A mix of all 3? -Put everything into Traditional now and complete Roth conversions in years when you drop tax brackets due to retirement as an example? We won't know what exactly will happen but we can plan to understand what your situation might look like in the future and make the best moves we see based on what we know. Then adjust as your situation changes. There are plenty of ways to plan to make the most of your situation. Don't leave your future up to chance. If you want talk about investment accounts and taxes just DM me "TAX" and I'm happy to have a conversation. ---- Hi I'm Evan, I'm a Financial Advisor and I have a wife, two kids and a puppy 👨👨👧👦 🐶 I create financial plans to guide you through a simple three step process to prepare for the future while enjoying today. Follow along for more 🔔 Ring it on my Profile Follow #memoryinvesting 🤜 Connect with me #memoryinvestor #memorybank #family #personalfinance #entrepreneurship ♻️ repost if you know someone this would help or if this helped you

In Retail, bad product placement leads to lost sales. Same with your money. Right now, you are accumulating investments (10-30 yrs till retirement). Not only do you need to allocate your investments according to your goals and time horizon (Asset Allocation), But you need to be strategic about where you place your money. That is known as Asset Location. Here are the 3 main money buckets: 🔹 Tax Deferred - Traditional 401K and IRA 🔹 Tax-Free distribution - Roth 401K and Roth IRA 🔹 Taxable - Brokerage/Investment account Sub-optimal placement could lead to future headaches. There are two things you need to be mindful of with Asset Location: 1𝐬𝐭: 𝐖𝐡𝐢𝐜𝐡 𝐛𝐮𝐜𝐤𝐞𝐭𝐬 𝐲𝐨𝐮 𝐩𝐮𝐭 𝐲𝐨𝐮𝐫 𝐦𝐨𝐧𝐞𝐲 𝐢𝐧. This impacts your tax liability and flexibility now and in the future. It provides a level of control over your taxes. You complain about paying too much taxes. This is an opportunity to do something about it. 2𝐧𝐝: 𝐖𝐡𝐢𝐜𝐡 𝐭𝐲𝐩𝐞𝐬 𝐨𝐟 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬 𝐲𝐨𝐮 𝐩𝐮𝐭 𝐢𝐧 𝐞𝐚𝐜𝐡 𝐛𝐮𝐜𝐤𝐞𝐭. Stocks, US Government bonds, corporate bonds, ETFs, mutual funds, REITs, municipal bonds, etc. Each investment behaves differently when it comes to taxes. Some are more tax-efficient than others. So strategic investment placement has the potential to provide additional tax benefits. So don't just invest money without a plan. - Have a strategy in place. - Review it often. - Change as needed. - Live your best life. 💡 Pay more attention to your Asset Allocation first. Don't try to get too fancy with Asset Location. Asset Allocation is more important. And don't just wing it. Your investments are what will provide you with income during your retirement when your job paycheck stops. It is your future paycheck when you no longer work. --------- *Asset Allocation is about how much of each investment type you should have (stocks, bonds, cash, etc). **Asset Location is about where to hold each investment type (the buckets of money). If you are unsure if you are investing appropriately for your goals and situation, send me a DM to start a conversation. #knowyourkoyns

Investing is more than just investment selection. It is where you put those investments that matter ~ let me explain... We all want the highest rate of return right? I know I do ~ yet there are thousands of factors to investment returns. Most completely out of your control. Yet there is one, that most don't think about completely inside your control. "Asset Location" All it means is what types of accounts are your investments in. The Three Types 1) Tax Deferred (Think traditional retirement accounts 401(k)/IRA) 2) Tax-Free (Think Roth retirement accounts) 3) Taxable (Think brokerage account) Here is how I think about each 1) Tax Deferred gives me a tax benefit today (but I still owe those taxes in the future). I have used this account for income-producing investments or those that are not tax-efficient. *Pro Tip - Tax-Deferred accounts are a double-edged sword because you get the tax benefit today but you can lose control over your tax bill in the future (RMDs) 2) Tax-Free gives me no tax benefit today but tax-free compounding and distribution. I use these accounts for my highest-appreciating investments (private deals and equities). *Pro Tip - Tax-Free accounts are not subject to RMDs and you can take the initial contribution to accounts such as Roth IRA out penalty-free (increases flexibility). 3) Taxable brokerage accounts are overlooked and underutilized (IMO). I use this account to hold tax-efficient investments. Remember any taxes realized (think income and capital gains) are taxed along the way. *Pro Tip - Always understand your after-tax return for any investments in your taxable bucket. So remember, there are thousands of factors outside of your control in investing ~ asset location is not one of them. Done correctly you can earn more and keep more of your investment returns.

Investors like me use retirement funds through self-directed IRA accountsor solo 401k account to diversify into real estate. Yes - most of the people's retirement funds are 100% in stocks market - sadly no diversification. Today, I want to share a few tips and tricks that I and a few clients that I work with have learnt through sometimes painful experiences: 1️⃣ Confusion between self-directed IRAs and solo 401ks. Most people are qualified to use self directed IRA account if they have a rolled over 401k from a previous employer. but if you have a company and don't have employees, solo 401k can be better for you. Do consult with the right custodians on tax implications and other suitability before making a decision. 2️⃣ Looking for quality service providers. Response time and clear instructions are the two biggest things to look for. The process is new and complicated to a lot of people. It can also vary per custodians who set it up. Also investments usually have a deadline. So without those 2 factors, it can be a pretty miserable experience for investors. 3️⃣ Dealing with different fee structures. Setting up and managing can cost hundreds of dollars or more annually depending on the package you select and the custodian's fee structure. Sometimes it doesn't make sense to invest smaller amounts like $10k - $25k because sometimes the fees may eat into your returns when the amount you have in the account is low and returns are low. 4️⃣ Don't forget the wiring fees. When wiring money from your self-directed account, add a little extra. You don't want to miss an opportunity because you're $50 short after wiring fee is being deducted from your $50k or $100k investment amount. 5️⃣ Patience and planning in advnace are required, setting up can take 2 - 4 weeks minimally. Start liquidating stocks early if you're ready to diversify. Depending on your IRA type, funds might take time to arrive. Hope the above is helpful for those considering diversifying with self directed IRA accounts! Would love to hear any challenges and work arounds you may have. Follow me for my tips and tricks on #investing and #life #IRA #RealEstateInvestment #401K #PersonalFinance #FinancialPlanning