Smart investors utilize all the tools at their disposal to make informed financial decisions. Key considerations include tax planning and investment, individualized financial planning and coaching, individualized portfolio allocation, investment selection and rebalancing. Russell Investments has identified up to 4.83% annualized additional investor portfolio performance by working with experts on your financial situation. As we enter the new year, here are 10 strategies to consider for long-term financial success.
Distributed all year round
1. Convert to early retirement. A tailored retirement plan creates opportunities to minimize lifetime taxes, increase fixed cash flow, and maximize tax-free growth and income. If the portfolio is properly tax structured during the service period, pre-RMD (minimum distribution required) retirees can convert pre-tax money into losses and spend taxable money while social security You can postpone receiving the
2. WISE DONATIONS — Most donations are not tax deductible. Tax reform has reduced the number of households itemizing deductions, and taxpayers are finding creative new strategies. Using retirement plans to fund charitable giving is rapidly emerging, with many taxpayers adopting bulk and/or qualified charitable deduction (QCD) strategies.
3. Seeking minimization of intergenerational taxes, even at retirementMinimizing lifetime taxes often involves paying taxes in lower-income years as a form of tax arbitrage by accelerating income that might otherwise have been deferred to a later date. You must choose to You can further enhance this strategy by allocating your equity (risk) assets to tax-exempt Roth accounts.
Intentional and personalized investment management
Four. Don’t settle for a one-size-fits-all investment management approach. Investment management decisions should always be based on planning outcomes and complement your balance sheet, personal goals, liquidity needs, and tax scenarios.
Five. Understand the role of bonds and why they are a good fit for your portfolio. Owning the right mix of bonds can help you achieve important goals such as liquidity, income generation, liability matching and diversification. Incorporating bonds is important to many investors, especially those who need immediate income from their portfolio.
6. Eliminate uninsured risk from your portfolio. Diversifying your portfolio across uncorrelated asset classes reduces volatility. Professional portfolio construction reduces unnecessary risk without sacrificing returns by limiting exposure to catastrophic single company or sector-specific failures.
Accumulation year
7. Evaluate investment and employment opportunities wisely. Maximize lifetime corporate value when making hiring and capital decisions. Talk to an expert to understand the difference between a W2 position and an independent contractor, benefits, and time value of money.
8. Use Debt Right — Not all debt is created equal. We don’t like debts on depreciating assets that encourage waste. But business, real estate, and education debt can extend wealth if properly structured and with payoffs in mind.
9. Organize your finances and reap the benefits of variable income. Using behavioral finance principles to design automated cash flow processes creates a discipline of saving while empowering spending. A stable process can be established to smooth out the volatility surrounding spending, savings and withholding.
Ten. Stack your investments in multiple tax categories, not just pre-tax. Many investors save primarily in pre-tax retirement accounts. Failure to consider the treatment of loss taxes can be shortsighted and increase the risk of increasing taxes paid over a lifetime, limiting flexibility, and reducing purchasing power imposed by tax increases.
Bonus! Plan your legacy. Substantial benefits can be generated by planning for beneficiary tax scenarios and properly configuring account types over the lifetime of both original owners and beneficiaries.
Ballast Inc. is an SEC registered investment advisor. Registration with the SEC does not indicate that an advisor has attained any particular level of skill or competence, nor is it endorsement by the SEC. All investment strategies have the potential for gains and losses. Ballast Inc. does not practice law or accounting. Always consult an attorney or tax professional for your specific legal or tax situation. For more information, see: ballastplan.com.
