You may not get much of a thrill from filing your taxes, but the process becomes much more enjoyable if you’re expecting a refund. So, if one is headed your way, what should you do with the money? The answer depends somewhat on the size of the refund. For the 2017 tax year, the average refund was about $2,760 — not a fortune, but big enough to make an impact in your life. Suppose, for example, that you invested this amount in a tax-deferred vehicle such as a traditional IRA, and then did not add another penny to it for 30 years.
If one of your New Year’s resolutions is to get healthier, you may already be taking the necessary steps, such as improving your diet and increasing your exercise. Physical fitness is, of course, important to your well-being, but don’t forget about your financial fitness. Specifically, what can you do to ensure your investment situation is in good shape? Here are a few “healthy living” suggestions that may also apply to your investment portfolio:
— Build endurance: Just as exercise can help build your endurance for the demands of a long life, a vigorous investment strategy can help you work toward long-term goals, such as a comfortable retirement. In practical terms, this means you will need to own some investments with the potential to provide long-term growth.
We’ve been enjoying a long period of steadily rising stock prices. Of course, this bull market won’t last forever. And when it does start losing steam, you, as an investor, need to be prepared. Before we look at how you can ready yourself for a new phase in the investment environment, let’s consider some facts about the current situation:
— Length: This bull market, which began in 2009, is the second-oldest in the past 100 years, and it’s about twice as long as the average bull market. — Strength: Since the start of this long rally, the stock market has produced an average annualized gain of 15.5 percent per year.
Halloween is almost upon us. Of course, on Halloween night, you may see a parade of monsters, demons, Transformers and other frightening individuals stopping by your house, exercising their right to demand candy. Fortunately, their appearance will be unlikely to cause you unpleasant dreams. But some people seem to have real fears about other things, such as what may happen in the financial markets. One way to keep those fears at bay is to avoid certain impulsive moves, such as the following:
— Avoid ducking out of the market. Consider this: In March 2007, the Dow Jones Industrial Average stood at about 12,275 points.
Columbus Day is observed on Oct. 9. And while it may be true that Leif Erikson and the Vikings beat Columbus to the New World, Columbus Day nonetheless remains important in the public eye, signifying themes such as exploration and discovery. As an investor, you don’t have to cross the ocean blue, as Columbus did, to find opportunities. But it may be a good idea to put some of your money to work outside the United States.
You’ve no doubt heard about the risks associated with investing. “This investment carries this type of risk, while that investment carries another one.” And it is certainly true that all investments do involve some form of risk. But what about not investing? Isn’t there some risk associated with that, too? In fact, by staying on the investment sidelines or at least by avoiding long-term, growth-oriented investments, you may incur several risks.
You have probably heard that diversification is a key to investment success. So, you might think that if diversifying your investments is a good idea, it might also be wise to diversify your investment providers. After all, aren’t two (or more) heads better than one? Before we look at that issue, let’s consider the first half of the “diversification” question — namely, how does diversifying your investment portfolio help you? Consider the two broadest categories of investments: stocks and bonds.
It’s summer again. Time for many of us to take a break and possibly hit the open road. But even if you go on vacation, you won’t want your investments to do the same — in summertime or any other season. How can you help make sure your portfolio continues to work hard for you all year long? Here are a few suggestions:
— Avoid owning too many “low growth” investments.
If you’re a certain age, or getting close to it, you might hear something like this: “Now that you’re older, you need to invest more conservatively.” But what exactly does this mean? For starters, it’s useful to understand that your investment preferences and needs will indeed change over time. When you’re first starting out in your career, and even for a long time afterward, you can afford to invest somewhat aggressively, in stocks and stock-based investments; because you have time to overcome the inevitable short-term market drops. At this stage of your life, your primary concern is growth — you want your portfolio to grow enough to provide you with the resources you’ll need to meet your long-term goals, such as a comfortable retirement. But when you finally do retire, and perhaps for a few years before that, your investment focus likely will have shifted from accumulation to preservation.
Tax Freedom Day generally falls on a day in the later part of this month. This is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year, according to the calculations made by the Tax Foundation, a nonpartisan research group. So, you may want to use Tax Freedom Day to think about ways you can liberate yourself from some of the investment-related taxes you may incur. Of course, Tax Freedom Day is something of a fiction, in practical terms, because most people pay their taxes throughout the year via payroll deductions. Also, you may not mind paying your share of taxes, because your tax dollars are used in many ways — law enforcement, food safety, road maintenance, public education, and so on — that benefit society.