Time Value of Money Explained
Young adults need to learn about money and investing – this story is about the time value of money. There are two people in this story: Joe Early and Joe Everybody. Joe Early starts early – 22 years old and putting away $2,000 per year ($166 per month) for eight years and he stops. A total of $16,000 is all that he put away. And we are giving him a really good investment that does a 12% return per year.
What is the Mega Backdoor Roth 401(k) and How Can I Complete this Strategy?
The 415 limit represents the total dollars that can be contributed to a 401(k) in a given tax year. The limit for these dollars is $61,000 for the year 2022 and goes up to $67,500 for those 50 years or older.
What is a Backdoor Roth Contribution and Can I do One?
With the Backdoor Roth contribution strategy you are able to contribute up to the maximum annual amount to a Roth IRA regardless of your income.
Should I Add my Kids to the Payroll? Understanding the Tax Benefits of Shifting Income to your Children
If you are a business owner in one of the top tax brackets, adding your kids to the payroll can be a great tax move that shifts income from your tax bracket down to your child’s bracket.
Smart Moves to Make during a Market Downturn
During a market downturn it is our natural tendency to want to make changes to our investment strategy despite a plethora of research that points to the optimal course of action being no action at all. When we log-in and see red on the screen, our fight or flight response kicks in and while that […]
Behavioral Biases and Other Pitfalls to Beware of
Behavioral Biases and Other Pitfalls to Beware of Nobel laureate Daniel Kahneman is arguably the world’s leading authority on human decision-making and cognitive biases that exist due to irrational judgement. As part of his research on the mind, he created a list of the five variables that lead to suboptimal decision-making as follows: A complex […]
What is a Roth Conversion and Why Should I do One?
What is a Roth conversion and why should I do one? When saving in a retirement account an investor has two options, to save money pre-tax or Roth. Pre-tax savings result in a tax deduction of the amount contributed each year (assuming you are not over any applicable income limits), tax-deferred growth of the investments, […]
Five Action Items to Protect Yourself from Identity Theft and Cybercrime (and maybe increase your credit score in the meantime)
Five Action Items to Protect Yourself from Identity Theft and Cybercrime (and maybe increase your credit score in the meantime) Create an online social security account at SSA.gov Freeze your four credit reports Monitor your credit score Access your free credit report Enroll in e-delivery at any financial institution you have accounts Create an Online […]
