Money Learning Checklist 4 – IRAs

money management

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An Individual Retirement Account (IRA) is a great way to accumulate a retirement stash.  It’s also a great way to protect asset growth and investment earnings from taxation.

I highly recommend contributing as early as possible.  IRA contributions can begin when an individual has earned income.  Therefore, it can begin with a teenager’s part-time earnings.  Visit your favorite bank or online broker and open an account if you don’t already have one.

Learn what your maximum contributions are

IRA contributions come with conditions.  There’s a maximum amount that can be contributed and it can change every year.  Know what yours is.  It’s based on your filing status, married vs. single, etc.  The next condition to reach is eligibility for a tax deduction.  Again, it depends on your filing status and whether you participate in your employer’s retirement plan.

For employees that participate in their employer’s retirement plan, a full or partial deductible contribution is still a possibility if the amount is less than the range specified for the type of filer.  You can easily find the current year’s table for the income ranges by filing status by doing an internet search or by looking in the IRS publication.  Notice that I’m not spelling it out, it’s up to you to gain some awareness.

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Check out my Facebook page

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If you haven’t visited my Facebook page, you are missing out on some great money information.  I pull a variety of interesting money articles from all over the World Wide Web.

Check it out and Follow or Like!

Thoughts on the money Facebook page

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financial control

Exercise Your Financial Control

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In Stumbling Upon Happiness, author Daniel Gilbert explains a few fundamental characteristics of how the human brain works. He completes the sentence The human being is the only animal that ______, by filling in “thinks about the future.” He indicates that the brain is an anticipation machine and its ability to “make” the future is the most important thing it does. The skill of expecting something next is a uniquely human tool.
In tandem with the faculty of expectation, our minds are built to exercise control.
This was a revealing point for me, and certainly explains a lot. My brain is wired to be in control, and that’s that. I don’t even like riding in the passenger seat. Not controlling the speed of the car and the braking gets my stress juices flowing. Even worse, if it’s not my car, I don’t decide when I can leave. There’s the anticipation factor working its way in. Not only do I struggle with not driving, I am thinking about when the drive home will occur.
I also excel as a project manager. I like to call the shots and make decisions, directing adjustments along the way, and finding solutions.

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Free Online Wealth Summit – Vanguard Senior Analysts on Active vs. Passive Investing

wealth-summit

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Free Online Wealth Summit – Vanguard Senior Analysts on Active vs. Passive Investing

 The stock and bond markets can be a fearful and terrifying place, especially considering their effect on your financial portfolio. No one wants to see red numbers on their account statement after all. Unfortunately, that’s part of investing.

On average, the stock market enters bear market territory (a drop of twenty percent or more) about one in every four years. We’re eight years into a bull market now without really coming close to bear market territory.

I found some insight from two of Vanguard’s senior analysts over at the Wealth Summit.  The Wealth Summit is a collection of interviews and panels with thirty or so money experts. Companies like Vanguard, TIAA, and Dimensional Fund Advisors have speakers at the Summit. There’s a New York Times bestselling author as well.

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Investing and Behavioral Risk

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So, you bought that stock and expected it to return a pile of cash to pay your current debt.  How long has it been, four months?  You watch it every day.  It’s a good day when it goes up, if it goes down, it clouds your mood.  Today, it’s down 12%, maybe it’s time to sell?  You sell the loser and put the diminishing dollars into the bank or, worse yet, into another stock that you expect to skyrocket.  Within a few months, you’re disappointed again.  The cycle repeats.

 

Here’s a sobering thought.  If you’re not happy with your investment returns, it’s your fault.  If you’re new to investing, you would best follow research-based advice – it will alleviate future regrets.

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