The Latest from Red Oak
What is a Roth Conversion and What are the Benefits?
A Roth conversion is a financial strategy where you transfer funds from a traditional retirement account, such as a traditional IRA or a 401(k), into a Roth IRA. This conversion requires you to pay taxes on the amount converted in the year of the conversion, but once the funds are in the Roth IRA, they grow tax-free and qualified withdrawals in retirement are also tax-free.
What is an ILIT Trust and how can it help with estate planning?
What is an ILIT Trust and how can it help with estate planning?
An Irrevocable Life Insurance Trust (ILIT) can offer several significant benefits for individuals and families seeking to protect their assets and provide for their loved ones.
Pros and Cons of Saving for College via 529 / Roth IRA / Brokerage Accounts
Are you planning on saving for your child's education? Here are the pros and cons of using 3 different types of accounts.
Some great Excel Shortcuts to know!
If you are looking to speed up your Microsoft Excel operations for both work and personal use, here are some helpful keyboard shortcuts to get you quicker in excel!
The difference between the geometric and arithmetic return...
Remember Warren Buffet's 2 rules for investing: Rule #1 is Don't lose money and Rule #2 is Don't forget the first rule. Why is this so important? Because as you lose money, the return you require to get back to "even" gets larger and larger.
The Magic of Compound Interest!
Compound interest, by definition, is interest computed on the sum of an original principal and accrued interest. It is "interest on interest" and it has a snowball effect on returns. Let's look at this example from ramseysolutions.com to understand why time in the market is more important than timing the market, or even capital invested to a large degree:
When does the Power of Attorney authority end?
When does a POA power abate? At death. Once the principal has died, the power of attorney powers are no longer granted to the agent, and estate law will take precedent.
What is the rule of 55 for your retirement assets?
Most people know that in order to withdraw money from an IRA or Roth IRA penalty free, the IRS makes you wait until age 59.5. Once you hit that number, you no longer fall victim to the 10% early withdrawal penalty (although taxes may still apply). The same goes for your employer sponsored plan, like a 401(k) or 403(b) account, where withdrawals are penalty free and clear after age 59.5. There is a caveat for the 401(k) and 403(b), and that is the rule of 55.
Remember to consider Expense Ratios in your 401(k)s…
When choosing funds to invest in in your 401(k), 403(b), or any investment account for that matter, be sure to not be snake bitten by the expense ratio. Without you even realizing it, you could potentially be paying a mutual fund manager 20% or more of yearly returns. Here's an explainer:
Are you ready for 2024?
As the new year commences, we get busy trying to keep up with our newly minted resolutions, catch up on work after the holidays, and set our sights on a clean slate of opportunities. Remember to keep your personal finances in good standing, as well. Here are a few reminders:
Why you should always use a credit card and not a debit card….
We hear a lot about how bad credit cards can be for the average consumer, and that is absolutely true if used with reckless abandon. Credit card interest rates can be north of 20% and if you choose to pay a fraction of the balance month to month, you can find yourself in a hole that is hard to dig out of.
How do you weigh risk and return?
First of all, if something sounds too good to be true, it probably is. The more return you seek as an investor, the more risk you are willing to accept. If the investment was easy, obvious, and a sure thing, everyone would then pile into it, thereby oversaturating itself and losing its advantage relative to other opportunities in the market. The expected return would plummet.
What is the Fed and what do they do?
We have been hanging on the Fed's every word for a couple of years now, as interest rates have risen precipitously over that time frame. What is the Fed and what do they control?
How much life insurance do you really need and when do you need it?
Life insurance is one of the most important financial decisions you make when you have others depending on your income production. Typically, the first big impetus to purchase a life insurance policy is marriage or your first child, but it really just comes down to if someone is depending on you or not.
Is a 529 account the first priority as a new parent?
What is a 529 account? Well, a 529 account is a tax efficient wrapper for your designated education funds for yourself or a beneficiary. Funds that are deposited into a 529 account grow tax free, so long as the deployment of capital from the account properly qualifies for eligible education expense.
Let your "threshold of pain" drive your risk level in investing
When deciding how risky or conservative to be when it comes to your investment accounts, there are many rule of thumb principles out there to sift through. Time horizon for your investments is undoubtedly a crucial factor when it comes to exactly how much risk to encapsulate in a portfolio. Age of the investor is also vital, and that principle piggybacks off of time horizon for obvious reasons.
Prioritize Allocation Over Location When It Comes To Investing
If you are attempting to invest your capital on your own, perhaps in a 401(k), be sure to focus first on the allocation of the assets rather than the location. By allocation, financial professionals are generally referring to the equity/debt split that makes up a portfolio construction.
How does a Health Savings Account work?
If you have a high deductible health insurance plan (HDHP), then a health savings account (HSA) is a great tool to take advantage of. A HSA is a tax-advantaged account specifically designed for medical expenses. The beauty of these accounts is that they are tax advantaged on both the front end and the back end. Here is what you need to know...
What can a Revocable Living Trust do for you?
Do you have a plan for your assets when you pass away? Where will all of your prized possessions pass on to when you leave your loved ones behind? If you don't have a verified, legal plan in place, your estate will be distributed according to the laws of the state in which you live. Everyone should have a will at a bare minimum, but better yet could be a revocable living trust for the following reasons: