Market downturn and your retirement portfolio

Can Your Retirement Porfilio Handle a Drop In the Market?

Imagine you’re five years out from retiring. Your assets are performing great, and you get excited because you will have enough money to retire and travel like you’ve always wanted to!

Then a major drop in the market happens, taking with it your hopes of traveling and a good chunk of your retirement money.

This is what sequence of return risk looks like for many retirees.

What is Sequence of Return Risk?

Sequence of return risk is the risk that an individual may experience negative investment returns early in retirement, which can significantly reduce the value of their retirement savings and potentially lead to a shortfall in retirement income. This can occur even if the average investment returns over the course of retirement are positive.

To illustrate the impact of sequence of return risk, consider two retirees who have the same average annual investment returns of 6% over a 20-year retirement. However, one retiree experiences a period of negative returns in the first few years of retirement, while the other retiree experiences negative returns in the last few years of retirement. The retiree who experiences negative returns early on will have a much lower retirement income than the other retiree, even though their average annual returns were the same.

Risk Management:

Sequence of return risk is important because it can significantly impact a retiree’s financial security. If a retiree experiences negative returns early on, they may need to withdraw a larger percentage of their savings to maintain their desired standard of living, potentially depleting their savings too quickly. This can make it difficult to recover even if investment returns improve in later years. In contrast, if a retiree experiences negative returns later in retirement, they may have more time to recover from losses, as they will have already withdrawn funds from their portfolio.

There are several strategies that retirees can use to manage sequence of return risk, including:

  1. Diversify your portfolio: Diversification can help to mitigate the impact of poor investment returns in any single asset class.
  2. Consider a more conservative investment strategy: A more conservative investment strategy may provide more stability and reduce the risk of significant losses during market downturns especially as retirement gets closer.
  3. Implement a withdrawal strategy: Developing a withdrawal strategy that takes sequence of return risk into account can help to ensure that retirees don’t withdraw too much from their portfolio early in retirement.
  4. Use annuities: An annuity can provide a guaranteed stream of income, which can help to mitigate the impact of poor investment returns.
  5. Consider working longer: Delaying retirement or working part-time in retirement can provide additional income and allow retirees to delay drawing down their savings until market conditions are more favorable.
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Benefits of a mega backdoor roth for retirement

Benefits of a Mega Backdoor Roth

One strategy for retirement planning that has gained popularity in recent years is the Mega Backdoor Roth. This is a savings strategy that allows high-income earners to contribute large amounts of after-tax dollars to their retirement accounts.

What is a Mega Backdoor Roth?

A Mega Backdoor Roth is a savings strategy that allows high-income earners to contribute additional after-tax dollars to their 401(k) plan, beyond the traditional contribution limits. This is done by using the non-discrimination testing exception, which allows employees to contribute up to the IRS annual limit ($19,500 in 2022) to their 401(k), and then contribute additional after-tax dollars up to a plan-specific limit. These after-tax dollars can then be rolled over into a Roth IRA, where they can grow tax-free.

Benefits of a Mega Backdoor Roth

  1. Tax-Free Growth

The primary benefit of a Mega Backdoor Roth is the tax-free growth of contributions. Once after-tax dollars are rolled over into a Roth IRA, they can grow tax-free, meaning that retirees can withdraw the money without paying taxes on the contributions or earnings. This can be a significant advantage for high-income earners who are in higher tax brackets.

  1. More Savings

The Mega Backdoor Roth allows high-income earners to save more money for retirement. By contributing after-tax dollars to a 401(k) plan and then rolling them over into a Roth IRA, individuals can save more than they would be able to with traditional contribution limits. This can be particularly beneficial for individuals who are behind on their retirement savings.

  1. No Required Minimum Distributions

Another benefit of a Mega Backdoor Roth is that there are no required minimum distributions (RMDs). Traditional IRAs and 401(k) plans require individuals to begin taking distributions at age 72, which can result in higher taxes and potentially push retirees into higher tax brackets. With a Roth IRA, there are no RMDs, allowing retirees to let their money grow tax-free for as long as they choose.

  1. Estate Planning

A Mega Backdoor Roth can also be a useful tool for estate planning. By contributing after-tax dollars to a Roth IRA, individuals can leave a tax-free inheritance to their beneficiaries. This can be particularly beneficial for high-net-worth individuals who are concerned about estate taxes.

Overall, a Mega Backdoor Roth can be a powerful tool for high-income earners to save more money for retirement and take advantage of tax-free growth. However, it’s important to note that this strategy is not suitable for everyone. Individuals should consult with a financial advisor to determine if a Mega Backdoor Roth is the right strategy for their retirement plan. With careful planning and the right strategy, retirees can maximize their savings and prepare for a comfortable retirement.

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Withdrawal Rate Risk in retirement: methods and strategies that could impact your retirement

How Your Withdrawal Rate Could Cause You to Run Out of Money Faster: Strategies to Know

Knowing how to withdraw your money from your retirement accounts doesn’t translate directly to sitting to one fixed method the entire time. Every CPA’s retirement is unique and what will work for one may not work for another. Some key factors that contribute to your withdrawal rate are:

  • Retirement Age
  • Predictable Income
  • Retirement Portfolio
  • Retirement Needs & Lifestyle
  • Other Risk Tolerance

Determine Your Investment Mix

Considering all the factors, the next step is to evaluate your investment portfolio. Do your investments support your long-term goals? Are they diversified enough to help reduce other risks you may face like inflation, longevity, or market downturn? The important thing to have in your retirement assets is the potential for growth while still withdrawing.

Strategy: 4% Rule

A fixed rate may be that perfect strategy for some retirees. Systematic withdrawals offer control for a specific period, but many people don’t consider these factors with the 4% rule:

  • Low interest rates make traditionally income-producing investments generate less income than expected
  • Inflation erodes the buying and spending power over time so you may need to withdraw larger amounts down the road
  • If the principal value of your investment is to decrease you will have less of your portfolio to withdraw from
  • Your income needs may become inconsistent due to increasing health care or medical costs. Thus, increasing the need for more money later in retirement

If you need a set amount withdrawn for a specific length of time, this method is perfect. Say you plan to work part-time for the first 5-10 years of retirement or are killing time until your Social Security benefits kick in.

Strategy: Buckets of Investment

Buckets help diversify your assets and provide different streams of income for you. One bucket may hold cash such as your emergency fund or another could hold fixed-income investments and protect principal. The last would hold the most growth for a longer period.

This strategy requires you work with an advisor to determine proper allocation and that your investments are protected and fit your long-term retirement goals.

Strategy: Interest-Only Income

Depending on your retirement accounts, you may be able to only pull from the interest earned without drawing on the principal balance. However, specific assets may unfortunately have penalties if you withdraw on interest only until a certain age.

This method does offer flexibility of switching from income stream to income stream yearly. This is another strategy that can be good for those transitioning from working full-time to part-time then to full retirement or those waiting for other income streams to kick in.

Important: Required Minimum Distributions

Federal tax rules deem you must begin taking required minimum distributions (RMDs) from tax-deferred retirement accounts such as 403(b)s or 401(k)s by April 1st after you turn the Stated Age. Same with your IRAs. Your Stated Age is as determined: age 71 if born 1950 or earlier; 73 if born 1951-1959; and 75 if born 1960 or later. Failure to take your RMD on time could result in a 25% penalty.

Other things to consider with RMDs:

  • The set amount you must take depends on your age, life expectancy, and year-end account balance
  • For multiple accounts, each RMD needs calculated separately but you can withdraw the total amount from just one account
  • Roth IRAs and other non-qualified employee-sponsors plans do not require RMDs
  • You cannot rollover RMDs into other tax-advantaged accounts
  • If you are still working at your Stated Age, you may be able to defer RMD withdrawal from your 401(k) or 403(b). However, the same does not apply to IRAs.

Having a withdrawal strategy in place for your retirement is important to ensure your funds last as long as you do and to also help reduce other risks you may encounter during retirement (market risk, tax risk, inflation risk). The last thing you want is to outlive your money and die broke.

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Secure 2.0 Act helping today and tomorrow's retirement planning: reshaping the future of retirement

Making Improvements in the Retirement Landscape: How the Secure 2.0 Act Impacts Your Retirement Today & Future

With the intent to reshape the American retirement landscape, Congress passed, and President Biden signed into law the Secure 2.0 Act as part of a large end-of-the-year spending deal. This Secure 2.0 Act is meant to help Americans save more for retirement and continue paving the way for a better retirement like how the original Secure Act had.

Within the legislation there are 92 small and large changes and updates made to improve retirement. A complete summarized breakdown of all 92 sections can be found at our website: www.retirementriskadvisors.com/secureact. Since the Secure 2.0 Act has many significant changes from required minimum distribution age to 529 rollovers to contribution limit increases, this article will cover a portion of the major changes that have begun.

Betterment for New Retirement Plans

With the Secure 2.0 Act incentive has been given for employers to offer retirement plans—increasing the possibilities of employees having retirement plan benefits.

This legislation has introduced a tax credit for employers offering defined contribution plans. Businesses with less than 50 employees could receive a startup credit covering all administrative costs up to $5000 for their first three years if they offer a defined plan. Not only does this bring more opportunity to employees, but employers could also receive an additional $1000 credit for contribution to plans per non-highly compensated employee. Employers are also encouraged under this provision of the Act to offer small incentives and can offer participation to part-time employees.

Changes have been made to enrollment and contribution increases to 401(k)s and 403(b)s. Once an employee becomes eligible for the retirement plan, employees affected begin with a 3% pre-tax contribution and gradually increases each year of employment up to 10% and no more than 15% of the employee’s earnings (effective 2025). Please note existing retirement plans do not have to meet these and there are exemptions for businesses with 10 or less employees or businesses that are less than three years old; government or church plans may be exempt, too.

Betterment for Existing Retirement Plans, Too!

With incentives to offer retirement plans comes an ability to include newer saving offers into existing retirement plans! For example, beginning in 2024, under this legislation, employers could match qualified student loan payments as contributions to retirement plans. This creates a great potential for student loans to get paid down and for employees to build their nest egg especially if they are strained by student loan payments.

Another great opportunity for retirement savings has been created under the Secure 2.0 Act. Before, employer matching contributions could only be paid into pre-tax retirement accounts. Now, employers can offer their employees the choice to have the match contribution go into their Roth retirement accounts—either fully or partially. Any Roth contributions would not be excluded from an employee’s gross income.

Regulatory & Other Updates

From the first day of 2023, a few new changes went to effect that fall under regulatory updates. The new required minimum distribution age is 73 and will be bumped to 75 in 2033. Another change you will see with RMDs is the penalty for not taking your RMDs. Originally, the penalty fee was 50%, and now it is 25%. And lastly, a great change that comes from the Secure 2.0 Act is starting in 2024 you will not have to take an RMD from your Roth account that is issued by your employer.

While there were increases made to 2023 contribution limits and catch-up limits, The Secure 2.0 Act gives an extra bump for catch-up contributions. For those age 60-63 the catch-up limit for 401(k)s is $10,000 until 2025. There is wiggle room within the legislation for this temporary catch-up limitation to increase if inflation keeps rising at an alarming rate. Moreover, the bill allows for inflation-adjusted catch-up contribution limits towards IRAs if inflation keeps rising. Read more here on the recent changes and increases to contribution limits.

Another update seen under the Secure 2.0 Act is a major change to 529 rollover allowance. 529s allows money to be saved for higher education with tax-advantages. However, there has always been a concern should the child you are saving for choses a different route than higher education. Under the Secure 2.0 Act you can rollover funds from a 529 account into a Roth IRA after 15 years with some stipulations. The Roth IRA must be for the beneficiary and is subject to annual and lifetime contribution limits.

In conclusion, a lot about the Secure 20 Act will impact your long-term and short-term retirement planning and savings. Even your investment strategies may change now. But these changes are mostly positive, allowing for a better, safer, more secure retirement that you deserve.

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2023 Retirement contribution limits

Retirement Plan Contribution Limits Are Increasing Come 2023

2023 is upon us and an important factor to tax-advantaged accounts and plans is the contribution limits the IRS sets. This year the contribution limits were increased more than they have been in the past due to historically high inflation and cost-of-living. Here is a general overview for 2023:

401(k) Plans

In 2023, for 401(k) plans the contribution limit has been increased to $22,500. This contribution limit applies to most 457 plans and 403(b)s.

For those over 50, the catch up contribution limit is increasing to $7500. So those over 50 in 2023 can contribute up to $30,000.

Defined Contribution Plans and SEPs

For these plans, the contribution limit is increasing by $5000 from 2022’s limit: $66,000.

SIMPLE Plans

Increasing just over a $1000, these plans can contribute $15,500. The catch-up for those over 50 has been increased to $3500.

IRAs

While the over 50 catch-up limit is not being changed for IRAs, the annual contribution limit is being raised to $6500.

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Retirement Planning is a Game of Chess

Keep Retirement Strategy in Mind This Holiday Season

With the holidays rapidly approaching, a goal often set during these times is to diversify your retirement funds. With retirement investment there are two main focuses: investing/saving and distribution. During retirement you are at your most vulnerable financially because a regular paycheck is not coming in. It is the longest self-imposed period of unemployment most folks face. The following is fantastic advice for when you are trying to invest.

Your retirement planned around living and may seem expensive to support. Remember, roughly 55% of folk live beyond their life expectancy. So, it is important to plan for the long haul. A long-term investment sustains a better savings, but there are risks being found there. Short-term investments usually have higher yields. It is important to balance these.

Spending now can save more money for the long road. An example of this is withdrawing properly to avoid provisional income.

Be reasonable when it comes to expectations. Historical returns may not be what your portfolio does. Returns typically fall below the average. However, this can be balance with a diversification of accounts. Though we have historically low interest rates, this means bond returns will not impact retirement much. This will affect those who have retired most.

Heedless of where you are at in retirement planning, relying solely on plans that require higher returns is dangerous. If you expect to make more in the future, that means spending much more upfront. Stocks carry a higher risk than bonds, so they will yield higher return rates. Simply put: Spending more today and expecting higher returns in the future is risky business. The risks and consequences must be evaluated on a case-by-case basis.

Strategy should always be a top priority. Diversifying your retirement portfolio is just a start. Considering all the risks you will face in retirement is the next stop. Putting all your funds in one bucket will expose you to much more risk—taxable, tax-deferred, and tax-free. Integrate different approaches and accounts to combat inflation, tax rates, rate of return, and even long-term care.

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all about rmds in retirement

How Should I Take My RMDs in Retirement?

Using tax-advantaged retirement accounts to save during your working years is a smart move. By using these accounts, you are deferring taxes. However, this postponement does eventually come with an expiration date. The government will come looking for its share. This bill comes in the form of calculated required minimum distributions (RMDs) beginning when you are age 72.

What are RMDs?

Required minimum distributions are withdrawals from your traditional retirement accounts such as 401(k) or an IRA. The amount is dependent on your savings and life expectancy. RMDs are calculated and serve to collect taxes on money that has grown tax-free. CPAs oftentimes do not want to take multiple RMDs because it increases taxability. However, whether liked or not, after 72, RMDs are mandatory.

How are RMDs calculated?

RMDs are calculated based on life expectancy and the total you have in your retirement accounts. Using one of three IRS tables, your life expectancy is given a factor number which is then divided into the funds subject to RMDs to determine what you need to withdraw.

What is the best way to take RMDs?

While the best way is always to consider your individual circumstances, there are two common ways to take RMDs. First, you may want to wait until the last possible minute which would be Dec. 31 of that year to maximize your returns. Secondly, you may want the regularity of a paycheck, so you could opt into 12 monthly payouts of the RMD.

Why You Should Never Skip & How to Ease Withdrawals

Skipping an annual RMD will result in heavy penalties versus what the income tax may have been. You would be fined a 50% excise tax of the RMD you should have taken. For instance, if you did not take your RMD of $10,000 you would have to pay a levy of $5000 to the IRS—an amount far greater than the income tax you would have needed to pay. Unfortunately, no catchups would be permitted in future years and no credit is given for taking more in past years.

The bill comes due to all tax-advantaged retirement accounts. Unfortunately, there is no way to avoid this, but there are a few ways to lighten the toll. Some strategies are following:

Charitable Donation

After calculating your RMD you can donate up to $100,000 to an authorized charity of your choice via a qualified charitable distribution (QCD). A QCD does not add to your taxable income, therefore you are lessened your tax bill and are providing funds for good causes. Note the QCD must be directly made to the charity. If you accepted it as an RMD and then donated, you may still be responsible for the taxes.

The Still-Working Exemption

CPAs not retiring at 72 are exempt, but the exception only applies to the current employer’s retirement plan. So, while it does not defer all RMDs, it helps! If you are approaching 72, consolidating your retirement accounts into your current employer’s plan may be a great idea.

QLAC Delays

You could use funds from a traditional retirement account such as your IRA or 401(k) to purchase a qualified longevity annuity contract (QLAC). Doing so may reduce your RMDs. As a deferred annuity, QLAC payouts can be put off until age 85, thus putting the tax bill the retirement funds used due later as well for approximately a decade.

Roth Conversion

As the only tax-advantaged retirement accounts, Roth IRAs do not have RMDs. You have a window between when you retire until when the first RMD comes due make use of Roth conversions. CPAs see their income drop after retirement making that window for Roth conversions more than perfect to convert traditional accounts into a Roth IRA while in the lower income tax bracket.

However, this often-underutilized retirement strategy comes with some risk.

  1. Moving pre-tax money means paying taxes when moved into the Roth IRA.
  2. You may increase the portion of your SS benefits that are taxed or may trigger the Medicare surcharge tax.

Ultimately, you can have your money grow tax-free, RMD-free until you or your family need the funds.

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RMDs to QCDs to save on taxes in retirement

Qualified Charitable Distributions May Reduce Retirement Taxes

Required minimum distributions may increase your tax bracket in retirement, but there is a way to help manage your tax exposure and help great causes: qualified charitable distributions (QCDs). At 72, you are required to take distributions from traditional IRAs to ensure you are not stockpiling the money, and that Uncle Sam gets his cut. QCDs are your ticket to reducing your retirement income taxes.

What exactly is a Qualified Charitable Distribution?

A qualified charitable distribution satisfies your required minimum distribution from your IRA directly to a qualified charity. Fortunately, the money gifted with a QCD does not count towards you adjusted gross income as it would with a regular RMD.

How can a QCD save you tax money?

They reduce your adjusted gross income but fulfilling the RMD requirement without needing to be reported as income.

How does a QCD work?

You instruct the custodian of your account to directly pay the RMD as a QCD to a qualified 501(c)(3) charity.

Are there any rules or qualifications for QCDs?

There are rules, but they are straightforward:

  • You must be 70 ½
  • To have the QCD count the funds must come from your IRA by your RMD deadline. And for most that is the last day of the year.
  • Whether one big contribution or smaller ones, QCDs have an annual max of $100,000 per individual. Meaning, married folks can donate up to $200,000.
  • QCDs cannot exceed more than what you owe in taxes or qualify for a refund.
  • IRA contributions may reduce the amount for QCD you can deduct.

Who can make QCDs?

Anyone with a traditional IRA who is over 70 ½ can make qualified charitable distributions. Note: QCDs only apply to IRAs and not 401(k)s, 403(b)s, SIMPLE, or SEP IRAs.

What charities can receive a QCD?

For tax purposes, the IRS has a defined list of organizations that can receive QCDs. Their list is here.

How do taxes work with QCDs?

Normal required minimum distributions must be reported and are taxed. No federal or state withholding tax is made on distributions to qualified charities.

Using IRS For 1099-R you report your QCD as a normal distribution. However, please note, this only works on IRAs that are not inherited. Distributions donated from inherited IRAs need reported as death distributions.

Though your QCD is not taxed, you cannot claim it as a charitable tax deduction (the IRS does not approve of double dipping). When you make the QCD make sure you get donation acknowledgement for your records.

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After Taxes Now, Tax-Free Later: Roth 401(k)

Tax-advantaged has quite the ring to it, doesn’t it? Unlike the tax-advantages a traditional 401(k) offers—funded with pretax wages—a Roth 401(k) is funded with after tax wages. Income tax has already been paid so when it comes to withdrawing in retirement, your money is withdrawn tax-free.

What exactly is a Roth 401(k)? Created in 2006, Roth 401(k)s are employer-sponsored retirement savings accounts that use after-tax money.

How They Work

While employer-sponsored, enrollment and participation in Roth 401(k)s is entirely voluntary. Payroll deducts the special funds after taxes have been taken out each paycheck. Some employers may offer matches for Roth 401(k)s.

In comparison, a traditional 401(k) and a Roth 401(k) have different tax-advantages. A traditional 401(k) reduces an employee’s gross annual income, providing a tax break now. However, regular income taxes will be due upon withdrawal during retirement. A Roth 401(k) requires income tax be paid but reduces an individual’s annual net income. But after the money is placed into the Roth account, no further taxes are owed when taken during retirement—this includes profits earned.

Much like the traditional 401(k), a Roth 4010(k) is subject to contribution limits and is based off the investor’s age per guidelines of the IRS. For 2022, an individual may contribute up to $20,5000. Those over 50 are permitted a catch-up contribution of $6500. Another perk Roth 401(k)s offer is no income limit.

Withdrawal Special Considerations

Certain criteria must be met for withdrawals to be tax-free.

  • The Roth 401(k) must be at least 5 years old.
  • Withdrawals must occur when the account holder is at least 59 ½. If before, account holder must has passed or experiencing qualifying disability.

Roth 401(k)s do require required minimum distributions. Once you are 72 the first RMD from your Roth 401(k) must be taken by the first April after you turn 72. If you are still working for the company who sponsors the retirement account, you may hold off taking a distribution.

Advantages and Disadvantages Summary

Pros:

  • Helps those who may be in a higher tax bracket during retirement (which is commonly seen)
  • Distributions are tax-free.
  • Earnings grow tax-free.

Cons:

  • Uses after-tax dollars, meaning during working years you are out that money
  • Contributions do not limit taxable income

Roth 401(k)s and Market Volatility

Sadly, you can lose money since a 401(k) is an investment into the market. However, most employers offer low-risk options like government bonds. You are always welcome to work with the plan sponsor and stir up your investment yield and risk.

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Market Volatility: Invest Smart, Know the Risks

Investing into the market for retirement funds is a risky business. Retirees often purchase individual stocks or invest in financial products such as mutual funds, exchange-traded funds (ETFs), or even variable annuities. There are other options such as defined contribution plans that invest into stock market and sometimes a company’s stock. 401(k)s are a common option offered by employers with a matching percentage. Having various investments allows for a more diversified portfolio, leading to a better chance at the safe and secure retirement you have always dreamt of.

However, invest smart and know the risks: the financial markets have significant fluctuations. There is a huge chance of majorly reducing retirement funds due to a bad down in the stock market. Therefore, long- and short-term investments are encouraged.

With the roller coaster of the financial markets, timing is everything when it comes to withdrawing from retirement savings & investments. Unfortunately, what may happen with the return of these investments is more negative than anything to the investor. Meaning, more of the account or assets may need to be liquidated to ensure spending power and keep that consistent stream of income. This is called sequence of return risk. An example of this was with the 2008 Recession; where the market declined and many lost their homes, their other investments, their retirements. For those who have awhile to save and plan are able to likely recover loss. Retirees with less time or who need their income soon will have to sell their investment assets while the market is down to reduce further loss and keep that income. A great loss is encountered if assets cannot be recovered.

Diversification of these assets/investments is important. Individual assets, such as the mutual funds and ETFS, may be managed professionally. These funds may have a focus on small to larger companies, even with specific fields or industries in mind. For individually chosen stocks and annuities, consider stock investments. Within these various options, there are performance and choice risks. Investment for retirement funds is a choice that should be taken with research and guidance.

As mentioned, there is always risk with investing—especially for your dream retirement. The following are some great strategies to limit the risks.

Diversify. Hold various investments across the classes (i.e. hold bonds and stocks). The more spread out and full the investments are better at loss absorption your portfolio is. For example, loss in individual stocks can be offset by holding stocks in 15+ companies and balancing the funds throughout these. If you were to hold the same amount over 5 companies/stocks, you are exposed to a greater risk if one of those companies crashes versus if you have the funds spread over 15 or more. Even considering fixed income investments is great! These will not yield as much return, however.

Long term is best. With investments, time is typically on your side. Especially in the case of recovering losses. It is rare you will see recovery happen overnight—it takes years. Those near or in retirement will want to monitor their investments closely because if a major loss occurs, you may be better off selling. Top experts suggest relying on income-generating policies while moving funds from the stock market throughout your retirement years.

Roll with the pooled. Like carpooling to an event, a pooled investment is smaller contributions from individual to make a larger investment fund. Some examples are mutual funds and target-date funds. Oftentimes these are done with financial experts and there may be fees involved.

Remember fees. Higher fees do not necessarily mean a higher yield on investments. They reduce the overall return, so monitoring and understanding them is important for your financial wellbeing. 401(k)s and other defined contribution plans may have fees; sometimes a fee may be charged if using a financial advisor for advice and portfolio management.

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