Reports

Income-Generating Investments

There are three basic categories of investments:

moderate
conservative
aggressive

Aggressive instruments are those primarily invested in for growth. They include things such as common stocks, stock mutual funds, commodities, and speculative real estate. Again, these are typically invested in for growth or capital appreciation, not income. They are considered aggressive because, while they can provide large short-term gains, they can also cost the investor large, sudden losses.

Understanding Social Security Benefits

Before you retire, you should know what all your various sources of income will be, and how much you can expect to receive from each. Obviously, Social Security benefits will be one of those sources, but how much you can expect to receive depends on many factors. There are ways to help maximize your benefits and get the most that you’re entitled to, and there are strategies to help minimize your tax burden from Social Security. The most important thing to consider in working toward those goals, however, is whether your Social Security benefits are coordinated properly with your other assets and sources of retirement income. We’ll address that shortly, but let’s begin with some basic facts about Social Security.

Are your Allocations Right for Social Security?

Nothing exists in a vacuum, meaning that even if you’ve determined the best time and method of taking your Social Security benefits based on your age, objectives, and lifelong earnings, it won’t matter unless you properly coordinate your benefits with your overall retirement income plan. Most people agree that Social Security is not enough to live on in retirement and needs to be supplemented with other sources of income. Therefore, it is essential to make sure your other savings and investment vehicles are as reliable as Social Security and capable of meeting the same financial objective: providing income that you can’t outlive.

Understanding Required Minimum Distributions

The idea behind Required Minimum Distributions, or RMDs, is that the government wants to give us a tax incentive to save for retirement – but they also want to make sure we don’t misuse it. So, if we’re in the 24% tax bracket and we put money into a tax-deductible IRA or a 401(k), each dollar we put in really only costs us 76 cents because it’s a before-tax contribution. So, the government is helping us save, but the government really wants this to be retirement money. In other words, they don’t want it to be money that you never spend or leave for your heirs. They want to make sure you pay tax on it eventually.

Are Your Allocations Right for RMDs?

There is an ideal order in which to pull from retirement accounts when taking IRS Required Minimum Distributions (RMD). The goals, which often go unheeded, are to help minimize taxes, help minimize taking principal, and earn as much as possible. These goals are easy enough to understand, but there are many factors to consider. It takes a well-planned strategy to help ensure the interest and dividends you’re generating from your savings and investments are sufficient enough to cover your RMDs, keep your tax bill at a minimum, and help satisfy your other expenses throughout retirement.

Market Math Made Simple

There is an ideal order in which to pull from retirement accounts when taking IRS Required Minimum Distributions (RMD). The goals, which often go unheeded, are to help minimize taxes, help minimize taking principal, and earn as much as possible. These goals are easy enough to understand, but there are many factors to consider. It takes a well-planned strategy to help ensure the interest and dividends you’re generating from your savings and investments are sufficient enough to cover your RMDs, keep your tax bill at a minimum, and help satisfy your other expenses throughout retirement.

The Hard Lessons of Stock Market History

If you’re like most people, you believe there’s a great deal of truth in the old adage that history tends to repeat itself more often than not. That’s an important adage to keep in mind when it comes to saving and investing for retirement because it allows you to get a glimpse into the future by knowing something about the past. The fact is, the stock market has been repeating itself consistently enough throughout history to allow us to see some repeatable long-term patterns, or market “biorhythms,” which are important to recognize and understand when it comes to building a smart, defensive investment strategy.

The Importance of Financial Defense

The great Alabama coach “Bear” Bryant once said, “Defense wins championships,” and you can bet that almost every great coach in nearly every sport has shared that same philosophy. Just think about some of the great sports dynasties, teams that won championships year after year: the Green Bay Packers under Vince Lombardi, the Boston Celtics under “Red” Auerbach, the Yankees under Joe Torre. You could go on and on. All of these teams knew how to score, yes, but they all started with the premise that a strong defense made their offense better. Strategically, they knew how to win games, but they focused first on strategies that ensured they wouldn’t lose games.