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Stocks and funds, bonds, retirement accounts, and investment property. Grow your money over the long run.
Historically, one enormous advantage the wealthy had over the rest of us was access to expert investing advice. They didn’t need to be experts on stocks or market movements or investing. They could pay someone to “just take care of…
Leave a portfolio alone and rising stocks will quietly raise its risk. Pick one date a year to compare your mix with its target, and rebalance whenever an asset class has drifted 5 percentage points or more. Rebalancing won’t raise your return, but it keeps your risk where you set it.
A 401(k) you left at an old job doesn’t follow you, and a small one may already have been moved into an IRA you never opened. Search the Labor Department’s lost-and-found database or call your old plan, then move what you find with a direct rollover, never a check made out to you.
Money you put in a traditional 401(k) or deductible IRA comes off your taxable income, so saving costs less than it looks. In the 22% federal bracket, a $100 contribution costs you about $78. Figure that cost at your own tax rate before you decide you can’t afford to save more.
Sequence of returns risk means the order of your investment returns matters once you start withdrawing. Losses in your first years of retirement force you to sell shares at low prices, and those shares never recover for you. Keep a few years of withdrawals in cash and short-term bonds so a downturn never forces a stock sale.
Your 401(k) contribution limit starts over on January 1, and any room you don’t use by your last December paycheck is gone for good. Each January, look up the new IRS limit, divide it by your number of paychecks, and set your contribution to that amount if your budget allows.
Selling an investment that’s down in a taxable account turns a paper loss into a tax break. The loss cancels gains you’ve taken, and up to $3,000 a year beyond that comes off your ordinary income. Reinvest in something similar but not substantially identical, and wait 31 days before buying back what you sold.
Claiming Social Security at 70 instead of 62 makes your monthly check about 77% larger if your full retirement age is 67. If you’re healthy and can cover the gap from savings, delay your claim. The larger checks make up for the missed years by about age 80, and they rise with inflation for life.
Required minimum distributions (RMDs) stack on top of Social Security and any pension. The share you must withdraw rises every year, so a big traditional IRA or 401(k) can move you up a tax bracket in your 70s. Use the lower-income years before your first RMD to draw it down at lower rates.
A health savings account lets your money go in untaxed, grow untaxed, and come out untaxed when you spend it on medical care. If your health plan qualifies, fund it every year, invest the balance, and pay small medical bills out of pocket so the account keeps compounding.
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