Although it seems like you have time to get your finances in order before year end…trust me, you do not. NOW is the time. If you wait any longer, you could get caught up in the joy and hoopla of the holidays causing you to push your tasks off. Don’t let the holidays BREAK you! Here are 5 items you need to cross off your end of year financial checklist:
- Use it or lose it FSA benefits. If you have put money aside in your Flexible Spending Account during the year, you must spend it ALL by December 31st. If you do not spend the funds in your account, you lose them. Losing your funds means they go back to your employer to use at their discretion.
- Open Enrollment is upon us. This is typically the time of year your employer will allow you to update your benefits. Benefits like disability insurance, retirement contributions, and life insurance. Make sure you choose the benefits that are best suited for your family and your budget. If you are married, discuss your choices with your spouse so you are not duplicating benefits.
- If necessary, rebalance your retirement account (401k, 403B, etc.). Work with your financial advisor to determine if you need to rebalance your portfolio. Based on market performance throughout the year, your retirement account allocation may have shifted. You will need to manually adjust your allocation to get back to your original targets—–unless you have a Target Fund that adjusts automatically.
- This is tax planning time! Many of the actions you need to take to help reduce your taxes have to be done by December 31st. You may need to take some last minute deductions, defer your income, take required minimum distributions or offset capital gains. These actions must take place by year end. If not, you could make costly money mistakes.
- Review your goals to determine what you accomplished and what you did not. Reviewing your goals now will help as you start to make goals for next year. Look at the goals you accomplished and what it required to be successful. Make sure you carry those behaviors into next year.
I’m here if you need me,
I am learning on a daily basis that people want to buy stocks, they just don’t know how. They don’t know where to start, who to call, or where to go. If you are one of those people, I GOT YOU! First, let me say this one thing. You can start investing on your own however, I always encourage new investors to get professional help. Getting professional help can minimize costly money mistakes. If you are new to investing and have limited assets, you want to avoid as many mistakes as possible.
Here are a few ways to start investing in stocks.
- Buy the individual stock. There are many ways you can buy an individual stock. One, you can open an account at a Brokerage Firm like Charles Schwab, E-Trade, TD Ameritrade or any other similar firm. Keep in mind, there may be a minimum to open an account. Two, you can use an online app like Robin Hood, Acorn or Stash. Many of the online apps are for the investor who can do everything on their own. You may have limited help. Lastly, you can buy stock directly from the company through their Dividend Reinvestment Plan or DRIP. For example, if you want to buy ABC stock, you would call the company DIRECTLY and set up an account to make monthly purchases of the stock.
- Buy Exchange Traded Funds (ETFs). Instead of buying stocks individually, ETFs allow you to buy a “basket of securities.” Because you are buying a basket of securities, ETFs are considered to be well diversified. ETFs also have the ability to be traded like a stock. They are bought and sold throughout the day on the market exchanges. Just like with individual stocks, you will need to open an account with a firm or online app.
- Buy a Mutual Fund. Mutual funds are professionally managed portfolios. Essentially, investors’ money is pooled together to purchase shares of different securities. Mutual funds can be made up of stocks, bonds, CDs, commodities or a mixture of these. They typically have higher fees than individual stocks and ETFs. As well, there is typically more turnover than an ETF. You can purchase mutual funds through a firm, an online app or sometimes with the mutual fund company. You are likely to see mutual funds offered through employer retirement plans.
These are 3 of the most common ways to get exposure to stocks. There are more ways, but they are usually reserved for more sophisticated or speculative investors.
I’m here if you need me!
According to experts, the majority of working Americans are not saving enough to retire comfortably. As a matter of fact, they say it’s hard for us to even come up with $1,000 in the event of an emergency. If we can’t fund a short term emergency, then surely we are not going to be able to sustain a long retirement.
Here are THREE ways to grow your portfolio:
SAVE more! You’re probably not saving enough. A good rule of thumb is to save at least 10% of your income and work your way up to 15%. Ten percent may seem like a lot to start with especially if you have not been saving at all. I say start saving as much as you can, even if it’s 5%. When you get a raise, SAVE YOUR RAISE!
Don’t feed the flames of FEAR. In order for your money to grow, you have to INVEST in the Stock Market. The Stock Market by nature will have some volatility, however you have control over how much volatility your portfolio is exposed to. If you make consistent contributions, diversify your portfolio and take on some level of risk, your portfolio will grow over time.
MAX out your retirement account, don’t take AWAY. While you are working and accumulating assets, NEVER take distributions from your account. Trust me, you are doing yourself a disservice. You will pay taxes and most likely a penalty. It is a painful hit to your portfolio and ultimately your retirement. Even if you pay yourself back, the money you took out is not invested so it’s not getting the opportunity to grow.
By implementing any one of these tips, you will put yourself in a better position to retire. Implementing ALL three will significantly increase the probability of reaching your retirement goal.