Budgeting

The Investment Account You Might Be Missing: HSA

No matter your investment strategy, the opportunity to invest 100% tax-free and avoid taxes on any investment growth, is unique. Investors need to understand the HSA (health savings account).

While the HSA was designed for healthcare costs, their tax structure mimics a 401(k) or IRA. You can use this IRS structure to your advantage. Before we get started, you can check your HSA-eligibility and determine if your health insurance plan qualifies you to make HSA contributions.

Why HSAs Matter for Investing

HSA tax structure allows for tax-deductible contributions, tax-free growth, and tax-free distributions (if you use the funds for qualified out-of-pocket medical expenses). Let’s translate this to HSA investing. These triple-tax benefits enable individuals and families to leverage their HSA contributions for unencumbered tax-free growth.

2018 HSA contribution limits are $3,450 for individuals and $6,900 for families. Imagine if you had that money to invest? This is likely why some of the largest HSA investment accounts, now have over $200,000 in funds. That is not a typo.

At the age of 65, HSA funds can be used for anything (not just health expenses), just like 401(k). Just pay income taxes at that point. No penalty. They also don’t require mandatory distributions. You can let your HSA investments grow well into your 70s, 80s, and 90s, without interruption.

HSA Investing Details

Choice is fantastic. Flexibility allows us to choose a personalized path. HSA investing provides that option. HSA investments are not encumbered by overbearing IRS regulations. As long as your HSA provider enables these features, you can invest in individual stocks, bonds, CDs, ETFs, and mutual funds. Find the personal investment strategy that works for you, without limits.

These factors are one reason why HSA investments assets have eclipsed $10 billion and are growing 45% year over year.

Retirement Investing

Want to save more tax-free funds for retirement? Or add more flexibility so you don’t have to wait until 59 and 1/2 years of age to access your funds (or be forced to pay a tax penalty), like with a 401(k)? Use an HSA to complement, supplement, or replace your existing retirement investing strategy.

Combine the tax-power of an HSA and 401(k) to become an ‘ultra investor’. HSAs and 401(k)s create the most retirement tax-savings you can get, legally, from the IRS. The more you save, the more you can invest.



Opening an HSA creates more saving and investing opportunity. Coupling tax-free contributions and growth with the power of compound interest is going to leave you with a more robust investment strategy. And hopefully more money for retirement.


How to Brexit-proof your online investments?

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Regardless if you are a traditional or online investor or if you are a novice or an expert, if you are living in the UK it is likely that two things are keeping you awake at night: Brexit and the bear.

We are getting close to nine years of bull market, and it is not unreasonable to think that we could be very close to the top. However, it is very difficult if not impossible to beat the bear that everyone is expecting to be around the corner. The difficulty is that you don’t want to be too late as the first downturn could be swift but in the same way you don’t want to get out too early as this hurts too. Let’s be honest nobody likes to leave too much on the table.

Yes, the bear but what about beating Brexit? We only suspect the bear to be around the corner while we know for sure that Brexit is coming. It is almost here, and it is happening the 29th March 2019.

So far it has been a prolonged and tortuous process, and the stalls in negotiations are casing a long shadow over the UK economy. ‘We don’t know yet how this is going to end up, but we are bracing for the worse’, said John Pentin financial analyst at a leading Top Trading Platforms UK comparison site.

‘A rise in the inflation is going to have a detrimental effect on consumer confidence, and this could get worse if companies are forced to start cutting jobs in the country. However, then again being too negative it is probably not the right thing to do as there is still some time to avoid the worse and ultimately there are possibilities also outside the EU even if maybe more in the long run’.

What Brexit has delivered so far is uncertainty, and surely this is not something that markets like particularly. It has pushed UK investors, however, both online and offline to be a lot smarter about how they invest. For example, you might be looking to invest in companies that do benefit from the uptick in inflation like discount retailer B&M. This company are offering groceries and non-food items on a seasonal basis at significantly better prices than the supermarkets. Investing in gambling companies is also an option as those tend to continue to do well even in difficult economic periods. Alternatively, you can also look at companies with domestic earnings in the non-discretionary spending space like for example Motor insurers.

Another area that is not going to slow down is Cybersecurity: following the growing number of attacks in the last months, this is an area that continues to attract capitals.

Another thing to notice is that even if the stock markets have suffered some steep falls in the past months, London-listed shares have underperformed most major world markets in the last 18 months: this is almost certainly caused by the anxiety about Brexit with international investors that have started to cut back their exposure to British firms.

As always tough with challenges there are also opportunities for investors. If you are prepared to spot undervalued companies and get them at low prices, you can make a considerable profit. The main issue though is that the majority of investors do lack in time and confidence of making such strategic investments.



What is suggested at this time is to analyse to see how ‘British’ are your current investments. Since London’s stock market is very international, you can find companies that are listed in Britain but have the majority of their earnings from elsewhere. So you would need to find out what is the exposure to the UK as opposed to other markets of all the companies you have shares. Once you have done this due diligence, you might want to reduce your UK exposure progressively to reduce your risk that a ‘bad Brexit’ is going to destroy your investments. Reduce doesn’t mean completely cut out so if things have a positive turn you are going to be able to benefit even if your UK exposure is significantly lower than it was let’s say a year ago.


How Investing in the Super Can Help in Managing Finances after Retirement

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You’ll acquire one of the biggest assets of your life by the time you reach your golden years if you start investing in the super much earlier on in life. Enjoying a certain lifestyle during your retirement years may require you to contribute a certain amount to your super every year. But you must remember that the amount of money that you contribute in a super won’t be accessible to you till the time you retire. You must check out your options in order to pick the right contribution strategies over others.

1. Investing Pre-tax Salary

Seek information regarding your chances of putting a bigger portion of your pre-tax salary into the super beyond the SG amount worth 9.5%. The amount of tax that you’ll need to bear is worth 15% of this amount. But you must remember that in your attempt to put more in the super, you’ll be taking a lesser amount back home by salary sacrificing.

2. Tax contributions

After-tax contributions should be made to the super quite consistently. No extra taxes are applicable on these contributions and this income is already taxed at the usual rate. If your entire super balance is lower than $1.6 million, then you’ll be entitled to make after-tax contributions. If the income of your spouse is worth $37,000 or lower, then you’ll achieve a tax exemption worth up to $540 while contributing to her super. You may achieve a tax offset partially when your spouse earns any amount lower than $40,000.

3. Tax-deductible contributions

Employees are now allowed to contribute to the super on their own and show it as a tax deduction. Earlier only self-employed individuals were allowed to make such contributions. About 15% of the amount of your contribution will only be taxed in this case. A notice of intent needs to be filled out and submitted with the super fund prior to filing your tax return.

4. Availing fund loans and other options

It’s actually very important for you to review your investment options and the super fund for at least once every year. You must check out all options while reviewing all investment options. Your retirement nest-egg gets accelerated and expanded when you opt for the super-leveraged property investment. Your investment strategy gets a boost up when you get a loan for your super fund. You may even consider checking if you have adequate insurance protection. Your premiums and fees may accumulate and affect your balance over time.

5. Consolidating the super

During our working lives, it’s quite natural for us to switch between jobs. However, the outcome is often a missing or lost super. A missing or lost super is often the outcome of such job switches. Missing or lost super can be easily tracked down if you opt for a lost super search. Increasing the retirement nest-egg could be a possibility once you accumulate them into a single super fund. You must check out existing funds and all associated withdrawal or exit fees for the same. Prior to consolidating your super, you must ensure you have adequate insurance protection.



Know the Limitations

Super contributions may be associated with certain limitations. You’ll need to gather more information about these contribution limits and their impact on your possibility to make such contributions and the amount of tax to be charged for these contributions.


Investing in Commodities With a Profitable Resale Value

Nowadays, people tend to think that the only way to make significant money is to set up their own business. They think that they have to come up with an innovative product concept, design and develop it, manufacture it, and sell it to consumers around the world. Now, this, of course, is a brilliant plan. After all, small business based on unique consumer products is a brilliant way to make a stable income. But have you ever considered investing as another money making scheme to get involved in? Investing involves purchasing something at a low price with the intent of selling it on at a higher price. Sounds relatively simple right? The good news is that it can be. You just need an eye for detail and to know what items you can make a decent profit from. To succeed, you’re going to have to invest in commodities with a particularly high resale value. This gives you a better chance of avoiding loss and making profit. Here are a few different products that you should consider specialising in!

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Smartphones

Nowadays, the majority of people have smartphones. But the latest phones on the market do tend to have a particularly high price tag. It’s not all too surprising that the majority of us avoid upgrading our contracts and instead look online to buy second hand models. You can profit significantly through selling smartphones. Keep an eye out for individuals selling their old cells for a low price when they upgrade their own contracts. Then sell these on for a higher price on online auction sites. Keep a particular eye out for Apple smartphones. These tend to hold the best resale value, as Apple is a highly desirable brand.

Gold

Gold has always held value. When you actually think about it, this may seem a little odd. After all, besides being aesthetically attractive, you can’t do a whole lot with it. But societies around the world have long associated this substance with monetary value for years now, and this is something that it has managed to maintain until this very day. So, consider buying gold from Sprott Money. Unlike paper money, gold has retained significant value for a huge portion of human history. It provides an excellent hedge against inflation and can almost always be sold off for a good profit.

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Designer Clothing

There are certain objects that will always be desirable, as the majority don’t have access to them. Items of designer clothing are out of the majority of people’s budget, making people want them more. So, you can make a serious amount of money by keeping an eye out for designer items in charity stores or for sale second-hand from individuals who have enough money to keep up with the trends. List on online auction sites, as this is where the majority of people tend to look for cheaper second hand goods.



These are just a few different commodities that retain their value well, allowing you to sell them on for much more than you invested into them!


What to Do After Your Trust Deed Ends

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Once your trust deed has come to an end, you’ll receive a formal discharge letter from the trustee and your details will no longer be on the Register of Insolvencies.

Trust deeds usually last for three or four years and once the time period is up, any unsecured debt included in the agreement that remains is written off. Your creditors can’t chase you for these amounts – they also can’t pursue you during the term of the agreement either. There’s lots of information online if you want to find out more about trust deeds.

You’ll feel free, so keep up the good work

You’ll feel like you’ve really achieved something, and you really have. Being in debt is scary and many people despair of getting out of it, so you should be proud of yourself. It takes dedication to pay off large debts and now you’ve freed yourself, you need to look to the future.

You need to check your credit file to make sure it’s been updated

When you enter a trust deed, which is formal insolvency, your credit rating takes a beating. Your trust deed will be on your file for six years after it starts, so you need to ensure that the credit reference agencies know yours is over. This means that when the six years are up, it’s removed from your file.

Usually, this deletion happens automatically, but you need to check with the three main credit check agencies to make sure it’s been marked. If this doesn’t happen within three months of the end of the agreement, you can write to your creditors to request the necessary notifications.

You need to rebuild your rating

You won’t have been able to borrow any money during the term of your trust deed – it’s one of the conditions – and formal insolvency does affect your credit rating badly.

When you apply for credit again, you may see that your interest rate is higher than normal to reflect the perceived risk on the part of the lender. You can rebuild your credit rating, though.

You can apply for a credit-builder credit card. These also have a high rate of interest, but if you pay off your debt each month, on time and in full, you’ll be showing you can be trusted. Eventually, you’ll be able to apply for mainstream cards with lower interest rates.

Prepaid cards are also very useful because you can use them in the same way as credit cards, but it’s your own money you’re topping them up with. The credit reference agencies find out that you’re topping your card up regularly, which works in your favour.



You can save the money you used to make your trust deed payment

This makes great sense because you’ve been managing well without it for a while, so why not invest it in your future? You don’t have to invest or save the whole amount if you want to have a bit more disposable income, but as long as you’re saving something, it’s all good. You’re building up a cushion of savings that will help to protect you from debt in the future.


How to Ensure Your Financial Well-being

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Americans are in household debt worth $13.15 trillion, which is shown in the records of the Federal Reserve Bank of New York as an all-time high. You’ll find it an uphill task to pull out of debt if you’re one of the numerous homeowners that are struggling with debt. By doing a simple research, you may actually make things less complicated and find the right solution to your debt problems.

Ways to Improve Your Financial Situation Are Mentioned Below:

Draw a household budget

A budget is truly helpful in providing you powerful insights. Apart from tracking your expenses and income, they help in identifying your financial strength. All categories of expenses that consume a major portion of your paycheck can be spotted when you accommodate expenses concerning past few months by back-dating your budget. You can make certain adjustments to your lifestyle and eradicate such expenses depending on the categories that they belong to. You may decide on watching less of movies and eat more home-made food just to contain your grocery bill to a certain limit.

Meet the bills with your paycheck

Most of your bill payments seem to have the same due date every month. You’re bound to catch up with the due date whenever you owe money for buying a smart-phone, utilities, and rent. A bi-weekly occurrence of paydays compels you to remember them more often. You’ll rarely find the due dates of your bills to be matching with that of your paydays. If you’re not among those that pay a closer look at their finances, it might leave a severe impact on your finances.

While trudging through a financial crunch you may not have the funds to settle your dues. You may resolve this issue by paying for your bills the sooner you see funds on a payday. You may consider transferring a small portion of your funds over to a different account if you find it tough to repay your dues on time. It will prevent you from using that amount over other things. Make sure you continue to make the minimum payments in case you aren’t able to meet the billed amount entirely within consecutive paychecks.

Create an emergency fund

There’s no point in ignoring your savings although paying your bills is of great importance. Much of your household makeovers and unforeseen damages can be made out of household savings. You may create an emergency fund for your future by setting aside a portion of your 401 (k) or pension. It could of real advantage in case you need extra funds post-retirement.

It might seem challenging to meet your bills and yet save a portion of your returns. You may get in touch with some direct lenders for installment loans to help cope with sudden financial challenges. These loans help you meet your utility bills till you receive your next paycheck. Attempting to create a fund for your unforeseen expenses is certainly the most practical way to handle your unforeseen expenses.

Prioritize all the dues

This is certainly not the first time that you’re borrowing money if you’re an American. You must have a few credit cards in your wallet apart from a few other lines of credit like that of your mortgages, car leases, and student loans. You’ll be overwhelmed by your negative net worth once you sum up all bills.

The sooner you meet all of your debts you’ll contribute more towards financial well-being. Financial experts don’t agree on the best methods of meeting one’s debt. While some of them prefer handling the highest debts ahead of the smaller ones others tend to go the other way round. It’s up to you to decide on whether you’d like to repay a quick loan with a high rate of interest or would like to repay a student loan worth a huge amount first.



Consult a financial expert

A financial advisor can help in ascertaining your financial strength more aptly than others. He possesses the much-needed professional expertise to address all financial issues. They’re an incredible resource for all those that experience debt and can help them by figuring out solutions to issues concerning financial techniques, services, and products. Apart from discussing the advantages of using services like investment apps, online loans, and refinancing, they could even help you develop a debt repayment plan that suits your financial situation.

These are just a few tips on how you can improve your financial strength with time. You must follow a combination of these ways if you’re really inclined towards improving your financial standing. Incorporate all of them into your routine, and you’ll discover more opportunities to meet your dues and gain financial wellness.


How Can Technology Detect Business Finance Fraud?

Detect Business Finance Fraud

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There’s good news and bad news when it comes to financial fraud. The bad news is that UK businesses and households financial fraud to this crime in 2017. That sort of startling figure shows that this is a serious issue that has to be dealt with. However, the good news is that this is falling – that number is down five per cent on 2016 – and that banks and card companies have detected and prevented two thirds of financial fraud.

The threat of financial fraud is increasingly sophisticated and almost exclusively technological. In order to combat this threat, therefore, we need technological solutions every bit as sophisticated to retaliate.

So, how can this help?

The growth of artificial intelligence

Artificial intelligence may seem like something from a science fiction novel, but the use of AI in business is becoming more apparent. Especially in the operations and the distribution sector, AI technologies are programmed to automate systems. If this can be trained to spot key signs of fraud then it can act as the ‘eyes and ears’ of a company – flagging concerns and preventing or pausing transactions before they happen.

It’s impossible for human beings to keep a close eye on every single financial transaction, but automated technology allows them to monitor more of what’s going on.

Bitcoin and blockchain

Cryptocurrency uses financial fraud to allow businesses to transfer funds around the world in real time. One of the potential benefits here is security. With blockchain, all transactions are recorded in real time – and records cannot be changed without the agreement of others. Put simply, it’s very hard to doctor information once it’s recorded and there’s a level of transparency around the way payments and transactions are made.

Biometrics

Passwords pose a vulnerability for many technological systems. While most workers might spend half their time trying to remember theirs, they present an opportunity for hackers to get into your software and get their hands on your data and your money.

Biometric technology is allowing for more secure ways of limiting access to systems. Thumb prints, eye scans, and even voice recognition should hopefully make life harder for fraudsters – and easier to detect people who are trying to access your systems when they shouldn’t.

But, use technology in moderation

Although you can lean on technology to help detect fraud, there’s always room for traditional processes too. You should use modern technology and foolproof traditional methods in tandem for maximum effect.

Things such as physical stamps and watermarked documents make it harder to forge documents and use these to defraud your business. As a business, you can custocustomize own self-inking stamp to add your own extra security step, for example. This can be very effective and it’s important not to move away from this sort of activity if it works.

Technology can help to detect business fraud. Automated systems, immutable records and biometric system access are all important developments to do this. Businesses can use a combination of all of those in tandem with tried and tested offline techniques to do their bit to avoid becoming a victim of fraud.

 


Wealth Management: A Few Aspects we Should Stop Overlooking

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Wealth creation is largely an elaborate process for most – at least for those who haven’t really amassed it (wealth) overnight. Though we don’t acknowledge it often – a financial cushion is simply not about building emergency funds. As integral a part of the wealth creation process that we are talking about, for us a “financial cushion” is created the moment we start talking about finance management or wealth planning.

As we go through the post in our quest for the less known ways with the help of which we can achieve our desired level of wealth creation, we will understand how important a role the sense of self efficacy ends up playing here.

How is the Concept of Self-Efficacy Linked to our Finances?

Yes. We don’t find ourselves understanding or rather discussing the psychology behind wealth-creation. And once we start doing that, we inevitably go back to Albert Bandura’s concept of self-efficacy, which actually goes on to determine a person’s thoughts, actions, motivation and behavior in the most powerful manner imaginable. He pointed out that people with a powerful sense of self efficacy are capable of viewing difficult tasks as challenges that need to be mastered in contrast to people with a weak sense of self-efficacy who view these same tasks as risks that should be avoided.

Since his revelations, financial experts at large have actually been trying to link the concept of sense of self-efficacy with finance. As Bandura had pointed out, self-efficacy is bolstered by various factors including:

  • Experiencing success
  • Controlling the emotional and physical responses
  • Choosing good role models
  • Reacting to encouragement

Why is it Important to Understand and Acknowledge the Role of Psychology behind Wealth Creation?

When it comes to financial success your sense of self-efficacy is definitely bolstered by your ability to pay off a large debt or for that matter staying away from expenditures on things you wanted to buy but didn’ need. Think about your friends early in their careers – living from paycheck to paycheck and often turning to the expensive quick loans in order to sponsor immediate needs. You are not required to do the same because you had planned your finances way before you had actually started earning. Do remember all these can act as major catalysts as far as laying the foundation of the sense of self-efficacy is concerned.

One of the most overlooked parts of wealth-creation is the psychology behind wealth-creation itself. The way we manage money actually has a lot to do with how we perceive our financial responsibilities. A lot is determined by the role models that we choose for ourselves. For instance, if we see someone in our family or friend circle fulfilling an almost impossible financial task, then we’re bound to be inspired to replicate the sense of self-efficacy. Additionally, a lot is dependent on the role models that we choose to be. The way we deal with our finances – or rather respond—to our pecuniary challenges from time to time- goes on to help us set examples for our kids as well. The need for prioritizing wealth management becomes a habit with them.

Understanding the psychology behind wealth-creation is important because only when you’re estimating your emotional reaction to certain financial responsibilities properly can you work towards changing them if needed.

For instance, today if you think that you will absolutely drown yourself in debts just in order to get out of your mortgage then you probably are someone with a very poor sense of self-efficacy. You can work towards developing a more positive change when it comes to the way in which you’re thinking about your financial responsibility now.
Besides mastering the psychology behind wealth creation, do make sure you are paying attention to these often overlooked aspects of this particular process.

How Often are you Replacing your Car?

You probably aren’t one of them who think that you should only change or rather replace your car when you NEED to! What we don’t realize is that every time we’re taking a loan from the bank to buy a new car the bank holds the title until we clear off the loan. Your car notably depreciates by 25% in the first year and by 50% in the next two years. Most of us end up trading our old car for new ones without even using the previous car optimally. However, we have already paid taxes, insurance, and loans on a depreciating asset. We might as well always refuse to acknowledge this but it’s only the car dealers who end up making profits in this case. There is a dire need on our end to stop selling assets too soon. You will understand how your efforts towards wealth creation will suffer owing to this habit of yours.

Investing

While saving remains a major financial goal at an early age—investing doesn’t. Ask most of the millionaires out there and they will actually tell you that investing is at the heart of prudent wealth creation. The tried and tested mantra in this regard is to subtract your exact age from 100 followed by investing the percentage of that number in equities and related funds including exchange traded funds, mutual funds and index fund.



How are you dealing with your Monthly Subscriptions?

Be watchful of your monthly subscriptions and your membership fees. While it feels great not to pay off all the dues at one go, do let us tell you monthly subscriptions and membership fees will eventually find you at the receiving end if you are not really keeping a check on them. There are so many times when even unused subscription fees end up killing your savings! Don’t underestimate the need for going back to or rather reviewing your subscriptions every month. If you are not using something do make sure that you are cancelling the same without fail. If you are prioritizing control over your expenditures you simply can’t ignore these subscriptions at any cost. Don’t pay up for what you don’t need. That’s perhaps the cardinal rule of personal finance management.

 


Start planning your finances in your 30s – Hoard enough cash for a stress-free life

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Gone are those good old days when you thought that the best way out is to hoard cash in your bank account. This is mainly because the returns that you get from saving money in your bank account will always be less than what you can earn from investing money in FDs, bonds, SIPs, stock market and mutual funds. For all those who wish to remain financially independent, the key is to invest your dollars at the right place.

However only investing your money won’t be enough as you also need to be track your progress so that you can remain invested even in the long term. Financial advisors always recommend people to start investing early during their 30s so that they have enough time to measure their success and learn worthy financial lessons. Here are few tips which can let you invest more, spend less and save more.

  • Don’t fall into the trap of collecting quick profits

As per what Warren Buffet has to say, one should invest only in those assets which he knows best. He even added that if someone invests in things which he doesn’t know, he is actually gambling. It is not that you will always require being an expert to accomplish investment returns which are satisfactory. But in case you want to become an expert, you can seek help of an investment advisor or follow a course to which you can gradually respond.

  • Bear in mind the philosophy of the rich and the poor

There is a famous perception that financial planning entails saving a little but after spending and then investing that little savings. If you have to understand the philosophy of the rich and poor, you’ll have to know that the rich usually invest their dollars and then spend the little amount that is left and this habit makes them even richer. On the other hand, the poor people spend their money and then invest the amount which is left over.

  • Understand the frugality approach

Are you often overcome with guilt and shame during the end of the month because of the fact that you think you’ve spent too much on something that you could do without? Do you think this is the right approach that you should have towards your expenses? Adopt frugality. Frugality is not just cutting down on your expenses but it is about selecting the things you love and spending on them and cutting down on those which you don’t love.



  • Cut down on borrowing money from people and lenders

Credit cards are certainly attractive options. When you borrow money which isn’t affordable now, it becomes affordable within a few months time. Warren Buffet says that he has seen most people fail on leverage – which is borrowed money. He thinks that the world could run in the same way even when so much leverage is not taken. In fact, you can make lot of money if you don’t borrow money so much.

Hence, if you’re wondering about the reasons behind saving and investing money, take into account the tips and advices shared in this post. Start off early so that you can get enough time to take care of your finances.


Capitalize on your retirement sweet spot years – What steps to take

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While you’re heading towards your retirement, there are high chances that you’re also stepping into a special time to do some really worthy tax planning. What is the sweet spot? It is the stretch of time in between when you retire from your full time job and when you begin to take the minimum distributions from the 401(k) plan or the traditional IRA account by the age of 70 and half.

Given the fact that full-time work is behind you and the mandated distributions are lying in front of you, this is also the time when you seem to be included within the lower tax bracket. This is why it is the best time to take a look at whether or not the strategies can work well along with the taxes. You will definitely get ways in which you can seek benefits of low rates on taxes but it is vital for you to ensure that any move that you make are in line with you personal retirement goals. How are you supposed to monetize on your lower tax bracket? Here are few ways.

Adopt the ROTH way

How about converting your conventional IRA or your traditional 401(k) plan into a Roth IRA? Though you will still be liable to pay taxes on the amount which you converted, yet the rate will definitely be lower. As against converting them, if you left these assets in a conventional 401(k) or IRA plan and not do anything with them till you started taking the minimum distributions, such withdrawals could possibly push you within an increased tax bracket. This is why. The tax rate that would be applicable to the assets would definitely be higher. If you withdraw an amount from your Roth IRA, this is tax-free and there aren’t any minimum distributions which come with them. In case you convert, you will be locked in.

Sell off few winning financial assets

In case you have any asset like stocks which are in your taxable account, it is rather an advisable option to look at whether or not it would make sense to sell them off so that you could be included in a lower tax bracket. This is one of the best opportunities through which you can monetize on the gains on which you’ve been sitting. The rate of tax on long-term capital gains is entirely based on the adjusted gross income. For instance, in case a married couple has income that’s under $77,200, they won’t have to pay any taxes on the gains. You also need to be aware that the people who fall under the category of high earners like married couples with adjusted gross income which is more than $250,000 are usually subject to an added 3.8% of investment income.



Employee stock options should be determined

For all the people who are heading towards their golden years with certain employee stock options, they can exercise such options at their lower tax bracket which could possibly be a smart option. What if the value of the stock is high and the exercise price is low, you will get too many in-built gains. You could use lower tax to exercise few of the other options which you have at hand.

Therefore, if you wish to maximize those retirement sweet spot years, you should take into account the above mentioned options and lead your golden years in peace.


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