
Maximize Your Retirement Savings with these 3 Simple Strategies
user 0 Comments Retire Wealthy Retirement Planning
(gentle music) – Retirement planning
is an ongoing process that requires monitoring
and tweaking over many years to help ensure you have enough to meet your retirement goals. In this video, we're gonna cover three best practices you can implement today. If you're approaching
retirement, you may want to download our retirement
checklist to see just how prepared you really are. Just click on the link in the description for access to this free
checklist right now. Now let's go over the three best practices for retirement planning that
you can implement today. Number one, make a minor
increase to your savings rate. Boosting retirement savings
doesn't require major shifts in contributions.
Small increases can
still have a big impact. For example, increasing your contribution by just one percentage point because of the impact of compounding
may really boost your savings. Many employers will allow
you to automate your savings and divert a percentage of each paycheck to
your retirement account. Number two, extend your retirement date. The longer you hold off on retiring the more time you will have to save money and take advantage of compounding returns. A study by the National Bureau
of Economic Research found that a 66 year old who
works one additional year before retiring could
increase their retirement savings income by 7.75%. Let's say you have a
million dollars in your 401k and you max out your contributions
at $1,875 every month. A 7% annual return rate
compounded annually would mean you gain an additional $92,500 after one more year of work
and $191,000 after two years.
Number three, think long term and boring. Work with financial professionals
to find investments that are most likely to help you
reach your retirement goals. While there are always exciting
investments to consider, most find it best to think
boring and long term. Oftentimes, the more
exciting investments come with big market fluctuations. These fluctuations can cause
feelings of greed or fear which could cause you to buy or sell your investments
at the worst possible time. Small behavioral changes
can make a big difference in your retirement savings. Boosting your savings rate, extending your retirement date, and selecting smart investments,
even if they're boring, can really help you maximize
your retirement savings. I encourage you to speak with an advisor about how these strategies
can be tailored to fit your unique financial situation and help you achieve
your retirement goals.
Call us today at (602) 343-9301 or visit strategyfinancialgroup.com and click on the orange
schedule meeting button. To download our retirement checklist, click on the link in the description. Thanks for watching, and please subscribe to our page for more content like this. (gentle music).

How Does A Precious Metal IRA Work?
user 0 Comments Best Gold IRA Companies Retirement Planning
how does a precious metal IRA work a gold Ira or precious metals Ira is an individual retirement account in which physical gold or other approved precious metals are held in custody for the benefit of the IRA account owner it functions the same as a regular Ira only instead of holding paper assets it holds physical bullion coins or bars how do gold and silver IRAs work a gold Ira works exactly like any retirement account with the added benefit that it provides you more control over your investment to include physical gold coins and bars and other IRS approved Silver Platinum and Palladium metals what will happen to Silver if the dollar collapses that is because the U.S dollar would essentially be worthless if it were to collapse in value in a sense the price of silver would be infinite if measured in terms of the US dollar is it better to own gold or silver is more volatile cheaper and more tightly linked with the industrial economy gold is more expensive and better for diversifying your portfolio overall either or both may have a place in your portfolio arguably the best use for gold as an investment is to mitigate portfolio risk what is the best way to invest in Precious Metals the best way to invest in Precious Metals is either to buy the metal outright and hold the physical form or to purchase ETFs that have significant exposure to precious metals or companies involved in the precious metals business is a gold Ira any good a gold Ira often comes with higher fees than a traditional or Roth IRA that invests solely in stocks bonds and mutual funds a gold Ira can serve as a good hedge against inflation but is also concentrated in a single asset class why should I invest in a gold IRA a gold Ira offers diversification from other assets that may be volatile during economic downturns or periods of high inflation such as stocks and bonds one of the safest Investments is gold because its price remains stable over long periods with little volatility should you invest in a gold IRA still a gold Ira can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers against other Financial assets like paper currency and stocks many Financial experts recommend keeping 5 to 10 of a portfolio in gold for a comparison of the best gold Ira company's visit https colon slash slash www.goldira401convesting.com gold Ira company slash click Link in the description below

Discover the Ultimate Retirement Hack: Tax-Free Income 2023 Update
user 0 Comments Retire Wealthy Retirement Planning
what's the secret to a tax-free retirement
planning right now the reality is that if you're in your 30s 40s 50s and 60s you better
maneuver today the tax code actually includes several moves you can make right now to create
a future tax-free retirement income but the optimal window may only last until 2026. that's
right there's really not much time to position yourself now most people have a financial planning
strategy to defer paying taxes wherever they can for as long as possible and hope for the best
but hope is not a strategy I would recommend the problem is that many diligent savers probably
like you are sitting on substantial tax deferred retirement savings that could be a future tax
bomb that explodes in your retirement in fact America's Ira expert Ed Slott recently
wrote a book exactly about this problem you were told to take advantage of your company
retirement plan and defer taxes while you were working until your retirement when you've
been a lower tax bracket because your income would be lower well guess what in many cases
that advice turned out to be completely wrong why did you know that many retirees have less
earned income than during their working years but pay more in taxes it wasn't supposed to be
that way you know what astute financial planners advise their clients to do we create strategies to
maximize the after-tax growth and after tax income for our clients because good tax planning is not
about paying the least amount of tax this calendar year it's about paying the least amount of tax
over your lifetime it's not what you make it's what you keep if you think tax rates are going to
be lower in the decades to come then move on from this video but if you think that we are in for a
higher tax rates stick around Colin Exelby here and I'm a CERTIFIED FINANCIAL PLANNER™
Professional with over 20 years of experience providing financial planning for business owners
and their families that just makes sense I own the financial advice advisory practice Celestial
Wealth Management and provide advice virtually to clients all over the country in my opinion for
many people when you get to retirement your taxes are going to be higher than when you are working
let me say that again your taxes will be higher in retirement than when you're working let's
first learn why this is a good spot to point out important disclosures the information in this
video is for educational purposes this is not specific financial planning or investment advice
in addition everyone's tax situation is different you should discuss your tax situation with a
qualified Tax Advisor before implementing any planning strategy so why will taxes most likely
be higher in retirement than when you are working well many of the tax deductions that you have
during your working years vanish in retirement student loan interest deduction well that's gone
you've paid off those debts mortgage interest deduction that's gone you've paid off your home
mortgage probably retirement plan contribution deductions those are gone Health Savings Account
deductions those are gone child tax credits well I hope your children are grown and out of the
home at this point adoption tax credits those are gone the home office deduction that's gone and
so are self-employment deductions but for many it's likely that withdrawing retirement savings
to live on where you have chosen to defer taxes through traditional retirement plans will put you
in a higher tax bracket than when you're working that's why I call these potential ticking tax time
bombs say that three times fast ticking tax time bombs ticking tax time bombs ticking tax time bombs
that is hard ticking tax time bombs look when you defer tax payments today through a traditional
retirement plan like a 401k 403b or an IRA you will pay taxes in the future in fact I like to say
a traditional retirement plan is actually a joint account with the government not an individual
retirement account you know what's worse in most cases when you turn 72 you are required to take
money out of those retirement plans whether you want to or not and this results in required income
on your tax return just like a paycheck whether you need the money or not and if you forget to
take it out you are penalized 50 percent of what you were supposed to take out all right now that
you know what the potential tax problem is let's figure out how best to fix it in order to get
to a tax-free retirement the first step is to understand how Social Security benefits are taxed
and then work to minimize or even eliminate their taxation most of us will be eligible for social
security benefits and for many retirees they're like a nice baseline income during retirement
how much of a benefit you receive depends upon when you take the benefit and how much in FICA
tax you paid in over your working career if you haven't already no matter what your age you should
apply for your Online Social Security account No I didn't say apply for Social Security all I'm
saying is apply for your Social Security account you see years ago we used to receive a social
security statement annually from the government in the mail it would tell you the amount of the
benefit that you've accrued what ages you can apply for it and your income history and this is
important information for your planning in order to get this information now you have to create an
online account so first go to socialsecurity.gov click on the sign up button then click on my
Social Security then click create an account and if you look right now this
is the information that you're going to need in order to open this account all right now that you have the account open and
you can see what your benefits are you also want to make sure you do analysis to determine the
optimal time for you and your spouse to draw on Social Security there are a number of strategies
that can be employed to maximize the amount of Social Security that you receive depending upon
your unique situation but for many people no matter what strategy they use provisional income
makes the Social Security taxable that's right and President Bill Clinton's first term in 1993
the Social Security tax was expanded so that up to 85 percent of your Social Security payment
could be taxed well what is provisional income you ask it's one half of your Social Security
income any distributions from your tax deferred retirement plans like traditional IRAs and 401ks
any 1099 capital gain or interest that's generated in your non-retirement investment accounts any
employment income any rental income and interest from municipal bonds the IRS adds it all up and
then computes whether your Social Security will be taxable so how much provisional income can
you have before your Social Security is taxed well before we get to that make sure you hit
that little like button and of course smash that subscribe button so you know exactly when I
release the new financial planning video for this series all right as of 2022 here are the tax rates
according to the Social Security Administration if you file a joint tax return and your combined
provisional income is under thirty two thousand dollars you pay zero tax on your Social Security
if your provisional income is between thirty two thousand and forty four thousand you may have
to pay income tax on up to 50% of your benefits if your provisional income is more
than forty four thousand dollars up to 85 percent of your benefit may be taxable the numbers are
slightly different if you're single and you can check them out in more detail at ssa.gov for
a married couple in order to keep your social security from being taxed you would need to keep
that provisional income below thirty two thousand dollars now I know that may sound unrealistic but
it isn't however for some people due to a pension or a large joint social security benefit it will
be impossible to keep Social Security tax free but for the vast majority of Americans the key
is to maximize the benefits in the tax code by planning now what assets that you own and in what
types of accounts you own them makes a significant difference in your future provisional income as
well as your after-tax income all right now that we know what provisional income is how do we keep
it as low as possible in retirement well first we take advantage of the tax rates today before
they are gone many people just don't realize how low tax rates are right now but we can look back
through history to give us some perspective before I actually looked up these rates I too didn't
really realize how low current rates really are while today's top rate is 37% many of us
pay just 22, 12, or even 10 percent this chart shows the top federal income tax rate by year going back
to 1913.
Look at the rates from 1941 through 1963. the top rates were over 80 percent and most were
over 90 percent now you might say well that's just not me that's only for the Mega wealthy well guess
what the other brackets were much higher as well right now we have the lowest rates since 1992.
the 2017 tax cuts and jobs Act created some of the lowest tax rates for Americans in history but
they will not last forever to create a tax-free income in retirement it's important to understand
where tax rates were where we currently are and where The Sweet Spot is so let's take a look at
these two charts side by side the chart on the left shows the tax rates in 2017. the chart on the
right shows the tax rates in 2022 for the purpose of this discussion I am going to focus on the
married couple rates that are in the middle what you see is that for most Americans once you exceed
the 10 tax bracket current tax rates are lower the former 15 tax bracket is currently 20 percent
lower at 12 percent of taxable income the former 25 bracket is 12 percent lower at 22 percent of
taxable income the former 28 bracket is currently 14 percent lower at 24 percent of taxable income
and even the former 33 percent bracket is five percent lower at 32 percent it isn't until you get
to the 35 tax bracket that the advantage goes away but what is really interesting is the changes
to the income levels that allow you to be in certain tax brackets what I want to focus on are
the two large jumps in the tax rates from 12 up to 22 percent and from 24 up to 32 percent these
are the big jumps to be aware of when creating your strategy let's take a moment to talk about
the difference between income and taxable income most people roughly know what their income is but
they don't really know what their taxable income is taxable income is the income you are taxed on
well geez that makes sense it is the income after all of your deductions this is an important number
and can be much lower than your gross income also in this country we have what is called a graduated
tax system as you move into a higher bracket you don't pay that higher rate on all of your income
the only income that is taxed at that higher rate is the income above the previous bracket you know
what is not taxed that little like button likes are free so make sure you hit that little like
button and of course smash that subscribe button hit that little bell so you know when I release
a new financial planning video in the series all right now we are going to look at the tax rates
for married couples and if you're single get married whoops just kidding but tax rates are much
better if you are married so maybe consider it if you're single the same principles apply but you
move into higher brackets at lower income levels for the married couple the first eighty three
thousand five hundred and fifty dollars of taxable income is only taxed at twelve percent once you
have over eighty three thousand five hundred fifty dollars of taxable income you don't move
into the 24 bracket until you reach roughly $178,000 of taxable income compare that to the 2017
brackets when the income threshold for moving into to that 24 bracket was a much much lower
$153,000 you know it's really wild well wild for probably me and some CPAs who love
this tax stuff but it is interesting let's look at the difference between the current 24 bracket
and the 32 percent bracket the next big jump until you make roughly three hundred and forty thousand
dollars of taxable income you are still in the 24 bracket compare that to 2017.
You can see that you
jump into 33 bracket at only 233 thousand dollars that's a hundred thousand dollar difference
it's a huge difference and is the largest sweet spot in the tax code but how exactly
do you design your current retirement saving strategy to maximize the standard deduction
when planning for your retirement your tax deferred retirement account balances should
ideally be at a level where future required mandatory distributions or rmds as they're called
would be less than your future standard deduction got it if you missed that and you didn't
understand what I said just hit that rewind button keeping your rmds below your future
standard deduction can potentially make your required distributions tax free while also not
causing taxation of Social Security benefits everyone's situation is different which is why
custom financial planning is extremely important so how do we do it this concept is actually
pretty straightforward so let's look at a hypothetical example Marsha and Don are both 55
years old currently they are 17 years away from mandatory IRA distributions we are going to take
the current standard deduction at age 65 of 28 700 and inflate it by a historical rate of 3 percent
per year for 17 years that standard deduction will be closer to forty seven thousand dollars when
they turn 72 and are required to distribute from their IRAs so it's 72 if they didn't have any
other tax deductions or provisional income they could potentially take up to forty seven thousand
dollars total from their IRAs without any taxes but how much will Marsha and Don be required to
take well the IRS has a nice table to figure that out this table is periodically updated so you
want to make sure you're using the current one when working through your calculation if you're
married but your spouse is more than 10 years younger congratulations there's a special table
for you but for this example Marcia and Don are the same age at 72 their required distribution
amount is basically 3.65 percent of their account balance based on their divisor of 27.4 now
that we know what they are required to take out we can calculate the ideal total amount for
Marsha and Don to have in their IRAs at age 72. so how large of a 401k or IRA could they have to
distribute their required distributions tax-free drumroll please one million two hundred and
eighty seven thousand eight hundred dollars you figure that out in this calculation one
million two hundred eighty seven thousand eight hundred times point zero three six five equals
forty seven thousand four or according to the 2022 IRS table one million two hundred eighty seven
thousand eight hundred divided by twenty seven point four equals forty seven thousand they both
equal the same thing conceptually a married couple both over age 65 with no other provisional income
could have just under 1.3 million total in IRAs and the distributions would remain tax-free based
on 2022 numbers this is the starting point for figuring out the ideal amount of funds to have in
a traditional IRA at age 72.
Even if you had some provisional income like say half of your Social
Security benefits you can create a strategy where distributions are not taxed or are minimally taxed
just incorporate that provisional income into your calculations and if you live in a state where
distributions aren't taxed even better as of 2022 there are 12 states that you could live in that
don't tax retirement account distributions take that into consideration when you're considering
where to live so this example figured out the ideal number with forward-looking planning you may
be thinking okay well having little or no assets in traditional IRAs and 401ks is also a good move
potentially putting all your assets in and other account types and limiting your rmd amounts that
way well let's take a look at why this is not a good idea let's say Marcia and Don only had one
hundred thousand dollars in tax deferred IRAs and 401ks at age 72.
Their required distribution
based on the tables would be 3649 dollars they would have 43 351 in unused deductions that
would be very poor planning in my opinion to get the maximum after tax retirement income you want
to make sure you optimize the full amount of your standard deduction unfortunately many retirees
do not because my industry promotes the delay in prey strategy so much many people don't
plan properly in the earlier years you figure that optimal number out for your own situation
through these calculations First Take today's current standard deduction and inflate that by
the number of years until you reach age 72 with a future value calculator like one from this site
or Good Financial Planning software like this one from right Capital that I use that will give
you your forecasted future standard deduction when your rmds start that will be the ideal
amount that you would want to withdraw from a tax deferred Ira or 401k to minimize or even
eliminate taxation of required distributions in order to figure out the optimal amount to
have in your tax deferred retirement account you would take that ideal distribution amount
and multiply it by the retirement Factor at age 72 which in 2022 is 27.4 that will give you your
ideal tax deferred retirement balance at age 72. now investment returns rmd assumptions and tax
rates do change over time so this is the living breathing strategy that you would continue to
monitor it is not set in stone rather than delay and pray plan optimally for your future this is
a video series about creating a zero percent tax bracket in retirement but you may have other
provisional income that makes that impossible don't worry the goal of financial planning in many
cases is to maximize your after-tax income and wealth to reach your personal goals even if a zero
percent bracket isn't achievable in your situation the upcoming strategies can still be used to
drastically reduce your taxes in retirement and maximize your after-tax wealth when you do that
you reduce the risk of running out of money in retirement and you maximize the Legacy you leave
behind don't spend years accumulating assets just for Uncle Sam all right now that we know how to
calculate the ideal amount to have in tax deferred retirement accounts let's talk Roth everyone loves
Roth except maybe the government that created them more on that in a minute so why does everyone love
a Roth IRA Roth IRAs have become so successful for some that the current government is looking at
ways to cap access to them for certain people and to force distributions for others so it's really
important to be taking advantage of this strategy if it makes sense for you why does everyone love
a Roth IRA in 1997 the Roth IRA was created to allow people to put away money and forego a tax
deduction in exchange you get tax-free growth and tax-free distributions and if anything is left
over after you pass away your heirs can withdraw those funds tax-free as well the government
thought this was a great way to incentivize saving for retirement as many pension plans were
going away at the time it also allowed them to collect some taxes right away but many people
who qualified still didn't contribute people believe that they will be in a lower tax bracket
in retirement but that's a myth many people are in a higher tax bracket in retirement given the
common Nation retirement income those increasing rmds and Social Security but not everyone can have
these accounts when these accounts were created in the late 90s they were limited to Americans
making less than a hundred and ten thousand dollars or a hundred and sixty thousand dollars
jointly in annual contributions were limited to only two thousand dollars we'll fast forward to
today and now if you make less than a hundred and forty four thousand in 2022 or 214 000 jointly
you can contribute up to six thousand dollars if you're under fifty and seven thousand dollars
if over fifty and if you do qualify in order to have those tax-free and penalty free distributions
all you have to do is have the account a minimum of five years and avoid taking earnings
distributions until after age 59 and a half all of your Roth IRA contributions can generally
be accessed without penalty so they can also act as an additional supercharged emergency fund
forego the current income tax deductions of a traditional IRA or 401K deduction in favor of all
the future tax-free growth of a Roth IRA or Roth 401k when traditional 401ks and IRAs were created
back in the 1970s tax rates were much higher in fact here are the married filing jointly tax rates
back in 1978.
That's the year I was born just look at how much higher tax rates were back then it
made a lot more sense to take the tax deduction then and just hope for lower rates it's exactly
the opposite now and is another reason allocating to Roth IRAs makes sense what about when it's
time to withdraw the funds are there the same requirements as traditional IRAs and 401ks
no Roth IRAs are not subject to a required beginning date or require minimum distribution
you never are required to take the money out if you don't want to in fact you can actually keep
making contributions past age 72 if you qualify and still have earned income but for many an ideal
strategy is to withdraw Roth Assets in retirement you know why well of course they're tax-free you
know why else they don't count as provisional income and do not make Social Security taxable
this is one of the key points to a 100 percent tax-free retirement income if you take away one
thing from this video it should be that Roth IRA distributions are tax-free and do not count
toward the provisional income that can make up to 85 percent of your Social Security taxable
they are much more optimal to use in coordination with your tradition IRA distributions to keep your
taxable and provisional income as low as possible all right the second part of the raw strategy
is to take advantage of the Roth 401k wait Roth 401k did you know that most employers offer both
traditional pre-tax 401ks and Roth after tax 401ks while they are available to over 86 percent
of retirement plans according to the psca's most recent survey only 26 percent of
participants actually make deferrals are you a solo entrepreneur if you're making use
of the solo 401K you can also have a Roth 401k many solo entrepreneurs or Partnerships still
use the old SEP IRA where the only option is pre-tax deferrals I would think twice about that
in fact I created this video that explains the differences between a solo 401k and a sap Ira in
more detail check it out the biggest difference between a Roth 401k and Roth IRA is that the Roth
401k doesn't have any income constraints attached to it you can make a million dollars of income
and still contribute up to twenty thousand five hundred dollars in 2022 if you're under 50 and 27
000 if you're over 50 into a Roth 401k that is a quick way to accelerate your tax-free retirement
savings since you can contribute much more than the Roth IRA the best part is almost anyone can
do it Roth 401k contributions can also generally be accessed without penalty so they too can act
as an additional emergency fund a potential much better way to have an emergency fund than sitting
in a low yielding savings account if you qualify are married over 50 and love this idea here
is how you and your spouse could get up to 68 000 in total contributions to this raw strategy
in one year 2022 Roth 401k contributions you put in twenty thousand five hundred dollars plus six
thousand five hundred dollars as a catch-up and you get twenty seven thousand dollars for you
and your spouse 2022 Roth IRA contributions six thousand dollars in plus a thousand dollars in
the ketchup equals seven thousand dollars each total that's 34 000 for each of you or 68 000
for both all in one tax year mind blown but Colin I'll be paying more in taxes now and those
funds will not get to grow for retirement they are permanently lost wouldn't I do better to take the
deduction now and have those funds grow pre-tax this is an extremely common question and I want to
put to rest this concern right now the number one factor here by a mile is taxes the difference
between the rates you pay now and the rate you will pay later if tax rates remain the same or
increase in retirement using the raw strategy will be better it's not about inflation earnings
or the opportunity cost it is all about tax rates if tax rates are the same at contribution and
later in retirement the end result would be exactly the same let's do the math here are
the assumptions we're going to start with a ten thousand dollar contribution lifetime
investment earnings of 200 percent and an assumed tax rate of 30 percent as with any
financial planning we've always got to start with these assumptions so that's why they're
here all right here are the calculations traditional 401K contributions you take a
ten thousand dollar contribution after two hundred percent lifetime earnings equals thirty
thousand dollars thirty thousand dollars times a thirty percent tax rate as you distribute the
funds is nine thousand dollars in taxes paid so the net after tax Ira balance from that initial
ten thousand dollars is twenty one thousand now let's look at a Roth contribution you're
going to pay three thousand dollars in taxes up front right because you have a ten thousand
dollar contribution going in times thirty percent so you pay the three thousand dollars
in taxes now you have seven thousand dollars to invest seven thousand dollars after two
hundred percent lifetime earnings grows to twenty one thousand dollars the exact same amount
that is because it's all about the taxes and the taxes you pay in the beginning versus the taxes
you pay at the end Joel Dixon Vanguard groups head of Enterprise advice methodology told the Wall
Street Journal in 2019 that the only factor to consider is current tax rates versus future
tax rates with Roth IRAs and Roth 401ks you will never have to worry about the uncertainty
of what future tax rate increases could do to your retirement savings and because distributions
are tax-free they also can lower your retirement income to a level where there is less of a chance
of hitting the Medicare premium surcharge known as Irma and it can keep your Social Security tax
free for most Americans but especially those who are in lower income brackets say 24 and below
I think this is a significantly underutilized benefit if future tax rates rise creating
a balance between tax deferred balances and tax-free balances gives you flexibility as
you approach retirement I love flexibility I would strongly consider an approach where you
take advantage of both the pre-tax traditional 401k and the post-tax Roth 401k contributions
you can actually figure out the ideal amount to contribute to your pre-tax 401k and your
post-tax Roth 401k with some basic calculations to create your optimal tax deferred retirement
account use a future value calculator like one from this site or Good Financial Planning software
like this one from right Capital that I use you would input your current balance the amount of
years until you reach age 72 your annual rate of return and then try different annual contribution
amounts plus employer matches until you reach your optimal tax deferred retirement balance
then you can subtract that annual amount your portion of it not the match from your annual
contribution limit to determine the amount that should go into the Roth 401k side once
you've maximized this strategy if you qualify you would want to make your annual Roth IRA
contributions this can help you create your very own zero percent tax bracket in retirement
by taking advantage of today's low tax rates wow that is a lot of information that I just
covered but the raw strategy is so powerful I want you to understand it in order to maximize this raw
strategy currently you can convert an unlimited amount of assets from traditional IRAs to Roth
IRAs if you pay the taxes now now there used to be an income cap but that tax law was changed
back in 2010 to allow anyone the opportunity to convert that huge Advantage may be slipping away
while we are still in these lower tax brackets and while conversions are unlimited it may make a
lot of sense to convert assets and pay taxes now are you in an artificially low income tax bracket
because you sold your business you semi-retired or are in between jobs are you under 40 building your
career and still in a low income bracket are you higher but not yet claiming Social Security are
you over the age of 59 and a half but younger than 72 then you my friend are in The Sweet
Spot for Roth conversions you pay some tax now but then have tax-free growth and distribution
in retirement while building a tax-free Legacy for your heirs in my opinion there is not a better
time than now to explore how a Roth conversion can help your financial situation well actually there
could be a better time as I release this video the stock market is trading just off its record highs
but if markets were to fall more significantly it makes the strategy even better you know why you
can convert assets while markets are down pay the tax then and then get the growth tax-free
on the way back up for those who converted in 2020 during the covid pandemic they look like
Geniuses right about now from February to March of 2020 the S P 500 fell roughly 35 percent what
if at that time you had your IRA you converted the assets while the markets were down and then
as the market has rallied back and even Beyond where it was all of those gains are tax-free
all into the future I mean if you did do that kudos to you but that's the type of strategy I'm
talking about and that could be the optimal time to do it it's always tough to pay tax now I get it
trust me I want to pay as little as possible but if the trade-off is pay a little bit now to not
pay tax in the future I will write that check all day long but the real kicker here is that Roth
IRA distributions don't count as provisional income so they can't make your Social Security
taxable I'll say that again Roth distributions in retirement do not make your Social Security
taxable now most of us will have social security income assuming that it's around in retirement
the delay and praise strategy employed by many allowed us to build up large pre-tax 401k and
Ira balances if you do nothing when you retire and take distributions those distributions will
most likely make your Social Security taxable the key to a 100 percent tax-free income in retirement
is to begin positioning yourself now by converting assets systematically over time you can create
a Roth IRA balance that can be withdrawn on your terms not the governments without taxes
and without making Social Security taxable so how do you pay the tax on a conversion in
most cases Roth conversion tax will need to be to pay the tax that's generally why it's best
to split up conversions over multiple years and this is also the big biggest reason why more
people don't do conversions it's nearsighted if you don't pay the tax bill now while you're in
these low tax brackets you and your beneficiaries will most likely pay even more tax later on all
the future growth and withdrawals as they push you into higher tax brackets another point to
remember is the five-year rule if you are under age 59 and a half and convert assets to a Roth
IRA the assets that are converted must be held for five years before any withdrawals can occur
otherwise you are subject to a 10 penalty now if you remember from Roth IRAs in the other videos
contributions can be taken out without penalty and without taxes these on these conversions must be
held in that Roth IRA for at least five years so when can you pay the tax from retirement assets
well if you're over 59 and a half you see at 59 and a half you can withdraw Ira assets without
the 10 early withdrawal penalty so you could do a conversion and then withdraw more assets to
pay the tax you have to be careful not to push yourself into a higher tax bracket though with
the extra withdrawals to pay the tax that's why in my opinion the best way to convert is to pay
the tax with non-retirement funds in my opinion now is the time to consider converting your IRA
assets but conversions aren't for everyone when doesn't it make sense here's a quick rundown of
when a Roth conversion does not make sense first anyone that can't pay the tax on the conversion
because once you convert you commit to pay the tax now the second reason anyone who believes that
their future tax rates will be lower than their current tax rates the third reason not to convert
is if you have a low tolerance for volatile and want the assets to be in safe low yielding
Investments generally it doesn't make sense to convert assets pay the tax and then not invest
them in growth oriented assets the fourth reason is something that I like to call stealth taxes
these are taxes because a conversion increases your adjusted gross income and you could raise
your income to a level where you don't qualify for certain things like medical deductions or the Irma
surcharge on medicare premiums kicks in or you lose child tax credits and education credits or
the taxation of social security or even the loss of the twenty percent qbi deduction for business
owners these are all what I call stealth taxes and you want to be aware of them but if these are
triggered it's often a one-time short-term expense to gain a much bigger benefit in retirement the
next reason you may not want to do a conversion if you you are applying for financial aid The
increased income from a conversion could impact it Ira assets are generally excluded from financial
aid assets but the income from a conversion is not so you may want to wait until financial aid isn't
needed another reason you wouldn't want to convert is if you need the funds soon if you pay tax
now and don't allow the funds time to grow then this strategy will backfire conversions are not
for the short term and the last reason that you may not want to convert is that generally if you
are over 72 and subject to rmds your conversion window may be over the only funds eligible for
conversion would be those above the rmd rmds cannot be converted remember rmds are required
minimum distributions notice that as I said this I said generally because in certain situations
conversions above the rmd can make sense ideally if you have a younger spouse or beneficiaries
that you plan to leave the assets to then converting now paying the tax and allowing that
tax-free growth for them may make a lot of sense every situation is different so work with your tax
and financial advisors to create your Roth Plan before it's too late HSA or health savings account
health savings accounts are triple tax-free saving and investing accounts that are part of a high
deductible health care plan these plans allow you to save and invest for the future by getting
a tax deduction now on your contributions tax-free growth if you invest the funds and tax-free
distributions if the funds are used for medical expenses huge benefits there with hsas and a
key part of the 100 percent tax-free retirement income strategy you know why not just because HSA
distributions are tax-free but because just like the Roth IRA distributions HSA distributions do
not count as provisional income and do not make your Social Security taxable in 2022 a family can
contribute up to seventy three hundred dollars into an HSA and eighty three hundred dollars
if you're older than 55.
If you're single you can contribute up to three thousand six hundred
and fifty dollars with an extra thousand dollars if you're over fifty five and there aren't any
income limitations the higher your current tax bracket the larger the deduction that you get
if you have the receipt for the medical expense you can withdraw funds whenever you like without
taxes and penalties no matter your age even later on that day make a contribution in the morning
pull it out later in the day now once you reach age 65 you can withdraw funds for any reason
without penalties but you still would owe taxes like any other pre-tax retirement plan if you
didn't use the funds for medical expenses stick around and I'll fill you in on a little-known
secret that can allow you to withdraw funds for any purpose without taxes or penalties all right
check this example out let's say your name Ross Geller you all know Ross from friends he's 30
and now he has a family you have 35 years until he reaches 65.
He decides to max out the annual
contribution of seventy three hundred dollars and the government never raises it let's also assume
that he never puts in that extra one thousand dollars when he reaches age 55. so you just put
in the seventy three hundred dollars every year for 35 years let's also assume you invest the
money in a diversified portfolio and net seven percent a year this is what that looks like your
total contributions are 255 500 your total gains our 824 277 your total balance at age 65 is one
million seventy nine thousand seven hundred and seventy eight dollars and if you use that money
for medical expenses all of those distributions could be tax-free and penalty free if you use
them for other expenses you know taxes but not penalties because you're older than age 65. now
I promise that secret strategy is coming you know what makes me sad or really just a little
frustrated for many people who have hsas there isn't any growth you might say Colin well how
can that be well many people contribute to hsas but they miss the most important step actually
investing the money according to a 2021 report by the employee benefits research institution
50 of people employ would have opted for a high deductible health care plan with an HSA but
only four percent of HSA accounts open for at least a year are investing their money and
after being open for 15 years only 20 percent of those accounts are invested what that tells
me is that a number of people are aware of the tax deduction for contributing to it but they
aren't aware of the huge growth potential or just weren't told that investing those funds was
even possible it seems the vast majority of people contribute to the HSA get the tax deduction and
then pull it right back out oh man if they knew proper planning can help you target a certain
amount of growth in the HSA plan so that you cover your assumed Health expenses in retirement
once you reach age 65 you can withdraw the funds for any reason without penalty but you don't want
too much in there because if it isn't used for health care you pay tax on the withdrawals like
regular income all right are you ready for that secret strategy to completely tax-free withdrawals
without penalty here it is there is no time limit on when you can claim the reimbursement from your
health savings account really well currently at least I can track my medical expenses right now
on a spreadsheet keep the receipts and then claim them in a huge lump sum later on in life for
whatever reason because these expenses never expire what type of expenses can you track the
list is literally endless here is a list that's compiled by Health Equity I'll provide a link to
it in the notes below look at this as we scroll through here AAA meetings antacids Botox condoms
crutches eye drops fiber supplements gambling treatment infertility a midwife and many many more
seriously it's almost anything you can think of that's medical related and you know what when
I make that distribution it would be tax-free and would not count toward my provisional income
you remember provisional income right provisional income is all of that income the IRS adds up
to compute whether your social security income is taxable now I would never tell someone to spend
all their time tracking all their medical expenses and logging receipts through their entire life but
hypothetically if you tracked every bill that was over a hundred dollars that might be a very good
way to help your future self all you would need to do is create a spreadsheet an Excel or Google
Docs somewhere in the cloud that's backed up list out the date of the expense what it was what
the cost was and confirm that it was HSA approved and like we said almost anything is then upload
an image of the receipt to the file and move on well that is an amazing way to maximize your
future tax-free retirement income and a secret strategy that many people don't know about the key
is to make sure that you track those expenses and don't include anything other than those medical
expenses when you pay for things most people think of life insurance for the death benefit but there
are many benefits while you are alive look there is a lot about permanent life insurance I didn't
know when I got started in the advice business it's taken me years to learn the ins and the outs
so I can easily understand how so many people run the other way when permanent insurance is brought
up will the stock market implode like in the year 2000 I have no idea it could triple from here it
could fall by 50 percent no one knows and if they say that they know run the other way after taking
into account expenses for a permanent life policy in my opinion it could be a very attractive
addition in this low interest rate environment will it outperform the stock market over time in
a Roth IRA probably not I mean I really really doubt it that's why I've got a Roth IRA but will
it do better than having money and checking and savings accounts CDs or low yielding bonds it
very well may especially because it isn't taxed if you earn four percent just four percent in one
of these policies tax-free and we're in the 22 percent tax bracket you would have to earn 5.128
percent before tax to do better what bank account CD or bond is paying that and many of us follow
widely held truths without actually doing a little digging now I am skeptical of almost everything
so the whole buy term and invest the different strategy deserved a little more digging first
when you buy a Term Policy it is typically a level death benefit like 500 000 a million two million
which means due to inflation eroding its value each year a Term Policy purchased decades ago
is worth far less an inflation-adjusted dollars second according to a Penn State University
study 99 of term policies never pay out a claim now thankfully most people don't need them and
they let the policy lapse but the dollars that are spent are gone forever third how many people
actually seriously invest the difference between what they would pay for a Term Policy versus a
permanent one well according to David Babel a professor at the Wharton School of Pennsylvania
quote people don't buy term insurance and invest the difference they most likely rent the term
lapse it and spend the difference now that is American for those that actually do invest the
difference what happens to the funds well they typically go into an account where interest income
is taxed and capital gains are taxed over time since 2000 the typical stock investor lost 49
or more of their savings not once but twice according to the famous annual dalbar study the
typical stock mutual fund investor earned 4.25 annually over the past 20 years ending December
31st 2019.
Now that's less if you're in the 22 bracket than what we talked about earlier over the
same time period the S P 500 earns 6.06 percent now you only got that return if you were invested
100 in stocks at all times and never Panic during those huge drops and those gains are taxed along
the way and whatever the government says that they should be taxed now it's true that permanent
life insurance policies can be more complex and they can be more costly because of all the
benefits that come with them also not everyone is insurable they're generally long-term planning
vehicles and have policy premiums that need to be paid to keep the policies in force whether through
deposits or dividends and if you would draw cash borrow or use cash value to pay premiums you do
reduce the death benefit it's also true that they are more inefficient in the early years as the
policy gets going but the longer they are held the more efficient they become it's kind of
like an airplane flying from New York to LA as the plane takes off from New York it's full of
jet fuel and takes a while to get up to cruising altitude but once there as jet fuel Burns off
the plane gets more efficient and flies faster it's the same with many permanent Life policies
the longer they are in effect the longer tax-free compounding of interest and dividends can occur
and if you structure these policies correctly with an agent that is looking out for your best
interests you can have a growing death benefit instead of a static one that benefits your heirs
and you can access the funds tax-free later on in life for that tax-free retirement income how do
you do that you borrow against the policy value ah well you must have to pay really high borrowing
rates right no borrowing rates are stated in the contract and typically four to five percent in
this current rate environment hey quick little plug here if you're enjoying this video make
sure you give it like and of course smash that subscribe button hit that little bell so you know
whenever I release a new financial planning video all right have you heard the saying buy borrow
die that means buy assets borrow against them to provide cash flow and then die many wealthy
clients implement this strategy to minimize taxes when do you pay tax well if you save
in a non-ira you pay taxes typically at 15 to 25 percent of gains and potentially more
if rates are increased in retirement account distributions from IRAs and 401ks you pay taxes if
it was income right typically double digit rates unless you're properly structuring your assets
for a zero percent tax bracket so is borrowing at four to five percent interest better than
paying 15 20 or 25 percent in capital gains tax I think so permanent Insurance structured
correctly can be an excellent strategy for a tax-free retirement and we just learned about
all the benefits while we are alive but what about passing on what we don't use if you're diligent
in your planning you most likely will have assets that you would like to pass along to the Next
Generation ideally you want to do that tax-free and pass on as much after tax as possible well
when Congress unleashed the secure act in 2019 it eliminated the stretch Ira man stretch Ira
that was previously around since the 1970s and it made possible for those inheriting an IRA to
take out proceeds over their lifetime potentially lowering taxes I've got a number of clients that
are utilizing that well with the secure act it says that you must withdraw all inherited IRA
assets within 10 years unless you are a spouse or eligible designated beneficiary or EBD as it's
called so Congress just made traditional IRAs much less attractive to leave for beneficiaries that's
moved permanent life insurance to the top of the list for efficient estate planning now do you have
a spouse who will inherit your IRA at some point and then owe taxes in the single tax bracket once
you pass on many couples forget that the odds are one of you will live longer than the other and
will pay what is referred to as the widows tax the fact that you have the same income and assets
but are now taxed as a single individual rather than married couple at much higher rates and the
government is counting on it wouldn't it be great to have an insurance payout that could help him or
her convert those funds to a Roth IRA and pay the tax for them I know I would love that Roth IRA HSA
and permanent Life cash value for the tax-free win you know what else is a win reverse mortgage
is what are they why are they important to a financial plan who do they make sense for and what
to look out for first what is a reverse mortgage a reverse mortgage is a type of loan that's designed
to give people age 62 or over access to the equity that they've built up in their primary residence
without having to sell it to be clear you can only get a reverse mortgage on the home you are
living in unlike a regular mortgage in which the homeowner makes payments to the lender with
a reverse mortgage the lender pays the homeowner now you have the option to receive a lump sum
a line of credit or a series of payments over time but you don't have to pay the loan back
you can if you choose to do so it's nice to have that flexibility you'll hear that word
a lot the loan balance accumulates interest over time similar to any other mortgage at the
stated rate on the loan and we will talk about how that impacts a financial plan in a little bit
the key part to understand is that the loan must be repaid when the borrower dies moves out or
sells the home and that's just like any other mortgage reverse mortgages are often called home
equity conversion mortgages or hecm for short and they're administered and regulated by the U.S
Department of Housing and Urban Development or HUD as many people know it it's a great great
way to provide flexibility to a retirement plan since the distributions are alone of your own home
equity guess what they are not included in your adjusted gross income reported on your tax return
you know what that means that means they don't count as provisional income they don't trigger
High income Medicare premiums or the taxation of Social Security benefits huge government insurance
is required and is provided through the federal housing Administration or FHA they're also a part
of Hud this backstop provides critical assurances to both the borrower and the lender Insurance
foreign HECM reverse mortgage guarantees the borrower funds if the lender goes out of business
and it ensures the borrower will never owe more than the value of the home when sold let me say
that again since that is really important if the housing market declines the borrower will never
owe more than the home is worth when it is sold the borrower gets what is in effect a tax-free
Advance on their equity in the form of a line of credit fixed monthly payments or a lump sum but
the borrower must also continue to pay the real estate taxes homeowners insurance and the cost to
maintain the home just like any other mortgage all right so why reverse mortgage is important to
a financial plan one word flexibility When You Reach what I call the retirement Red Zone the five
years before retirement and the five years after retirement you're in a very important zone for the
success of your retirement plan the ability to tap different assets to pay for retirement living
expenses in a tax efficient manner increases the success rate of your financial plan for many
retirees a good portion of the retirement assets are socked away in tax deferred retirement
accounts like traditional 401ks and IRAs I just talked with someone today about this over 90
percent of their assets are in these traditional 401ks and IRAs guess what these assets have likely
never been taxed so what happens when you go to withdraw them well when they're withdrawn they're
taxed at income rates and they contribute to provisional income that can make Social Security
taxable and increase your Medicare premiums as retirees get close to and start drawing on these
assets the last thing that you want to see is a significant market downturn like what happened
in 2000 to 2003 or 2007 to 2009 you probably remember those periods well or at least saw your
parents deal with them of course there is no way to predict if or when a major stock market
decline will occur why is this so important to avoid in your retirement Red Zone well if stocks
decline significantly and you're forced to sell them low because you need funds to live you lose
the ability to wait out their eventual rebound for that reason having an ability to access other
assets like a reverse mortgage can help reduce the chance of running out of retirement funds early in
essence if markets were down and you had access to a reverse mortgage you could potentially use those
funds tax-free remember until the stock market recovers and then tap the retirement accounts you
could even elect to tap those accounts and pay back the home equity you took out if you wanted
to there's nothing in reverse mortgage that says you can't a second reason reverse mortgages can be
so important to a retirement plan has to do with the taxes and surcharges these are what I like
to call stealth taxes because they creep up on you without realizing it currently there are two
significant jumps in the tax bracket at certain income levels from 12 up to 22 percent and from 24
up to 32 percent if your Social Security pension or other income each year comes to the middle of
a tax bracket and retirement account withdrawals would push you into a higher tax bracket it
can be beneficial to use assets like a Roth IRA and a Roth 401k or home equity through a
reverse mortgage to keep your income out of those higher brackets paying loan interest can be
a lot less than paying significantly higher taxes from creeping into a higher tax bracket this is
where sophisticated retirement income planning can potentially save you taxes is at 22 percent thirty
two percent or even more who do reverse mortgages make sense for all right now that we know many of
the advantages of reverse mortgages let's discuss who they are most appropriate for actually the
better way to answer this question is to outline who they are not for if this is not your primary
residence you cannot get a reverse mortgage second if you are not yet 62 years old you cannot apply
for a reverse mortgage and third if you believe you're going to sell your home in the near
future to move somewhere or downsize I think a reverse mortgage on your current home may not
be the best option because of the costs involved so who do they make sense for ideally they make
sense for someone who plans to stay in their home for the rest of their life and is looking
for flexible ways to access tax-free cash in retirement first if you're single as I said you
must be over the age of 62 to qualify if you're married only one of you must be over the age of
62 but all borrowing qualifications will be based on the younger spouse's age that's important if
you have a wide age difference between the two of you if you're married it is mandatory that
both of you are listed on the loan but that's also good for financial planning purposes now many
times people think that using home equity is the last place you should go for retirement funds I
am here to challenge that thinking I talk a lot about flexibility in my financial planning videos
and that's because we don't know what financial markets will do in the future what unexpected
Health scares we will have what tax rates will be or what the world will have in store for us
who thought we would have a pandemic not many people so proactively creating access to various
assets allows us to customize where we get funds in retirement and when this can potentially lower
taxes significantly in retirement and can allow you to avoid having to sell stocks to live on
during a downturn even CNBC personality and PBSO Susie Orman recently said on her show that
accessing a reverse mortgage is often a better option than selling stocks when they've declined
or paying capital gains taxes well duh that seems to make a lot of sense to me all right now that
we know who a reverse mortgage candidate is let's fast forward a minute what happens when a reverse
mortgage borrower does pass away after a borrower passes away The Heirs take over the responsibility
of repaying the reverse mortgage balance typically airs simply sell the house and use the pro
proceeds to repay it proceeds from the sale of the home will always cover the entire repayment
amount even if the loan balance is higher than the sale price of the home as a non-recourse loan
no other assets of Errors can be taken by lenders to repay the reverse mortgage that is huge and
an often overlooked part of financial planning now while most heirs plan to sell their parents
homes if the heirs prefer to keep the home as an inheritance they only have to repay 95 percent
of the loan that's a nice Advantage all right so what to look out for number one watch out for
pushy sales people recommending a reverse mortgage Without Really knowing your financial situation if
it sounds like they're selling a reverse mortgage to anyone with a pulse run as fast as you can
the other direction work with a knowledgeable financial planner who knows your situation number
two scrutinize the cost of the loan so you know what they are but don't dwell on them I've seen
a number of misinformed people talk about the high borrowing costs of a reverse mortgage as a
reason not to pursue them well as with any loan there is an underwriting process to determine if
the borrower has the financial means to pay for the loan traditional mortgage loans are known to
have mandatory closing costs and fees and reverse mortgages are no different both loans require
expenses and closing costs and sends reverse and traditional mortgage closing costs include many
of the same types of fees the overall expenses are often very comparable what is the major difference
the major difference is that reverse mortgage borrowers will often need to pay insurance on
the loan to the FHA this is what backs the loan if housing prices don't keep up with the loan
value in my opinion it's a small price to pay for the Peace of Mind of not owing more than the
home is worth when it's sold that was a lot of content I love helping people achieve their goals
even more I love how real financial planning can give people like you confidence reduced anxiety
and a more fulfilling life without worrying about your finances now when I say financial planning I
am not talking about some 125 page book that some investment firms sell you for a couple thousand
dollars that tell you some huge number that you're going to need for a successful retirement and
all it does is sit on a shelf in your basement Gathering dust I am talking about true financial
planning optimizing your cash flow protecting you and your family from an untimely accident or an
illness that can derail your finances minimizing the taxes that you pay now and during retirement
by efficiently building assets and efficiently Distributing Assets in retirement keeping stealth
taxes like those on Social Security and Irma surcharges as low as possible and determining the
optimal way to build a legacy for your family this is true financial planning if you're watching this
video you're probably interested in working your way toward a 100 percent tax-free retirement is it
even achievable for many people the answer is yes for others while the answer is no there are many
ways to drastically reduce the amount of taxes you pay to the state and federal government now if
you watched all the videos you may say to yourself this is amazing stuff I'm gonna start implementing
these strategies right now but you may not know where to start you may not be confident that
you're doing things correctly you may not have the time to do it all yourself or most importantly
you may just want to coach with another set of eyes to help you along the way well that is what
I do I've been helping people build their path toward prosperity for over 20 years through two of
the biggest recessions in American history as well as a global pandemic if you think you're ready to
supercharge your financial life and are looking for a coach to guide you I would encourage
you to visit my website at celestialwm.com click the button that says start here and book an
initial 30 minute phone call if on that call it looks like that you may be a good candidate I will
provide you with a link to create your very own free asset map and asset map is a one-page visual
representation of your financial situation we will then schedule a second call to see if or how we
can work together still not convinced check out these case studies in the resource section on my
website three examples of financial planning cases that are pretty typical of my work if one of them
feels like your situation we should talk again I hope you enjoyed this mini-series how to create
a 100 percent tax-free retirement income taxes are often the number one expense many people have
let's craft a way to minimize your taxes through efficient financial planning right now they say
the best time to plant a tree was 20 years ago and the second best time is today same thing with
planning for your financial future the comment I hear most often is Colin I really wish I put these
plans in motion 10 years ago don't let that be you current tax laws are expiring in 2025.
so the window for optimal planning is closing just click the link down in the
notes to get started get clear be clear

Teachers: How to Save for Retirement Without Social Security or Pension – YMYW podcast
user 0 Comments Retire Wealthy Retirement Planning
We got Anna. "Hello Joe and Al, I love your
funny and thoughtful podcast." Well, thank you, Anna. "I'm a teacher in my mid-40s at
a state school. I opted out of the underfunded pension system when I started the job a decade
ago. Instead, I contribute to a defined contribution plan and various supplemental retirement accounts.
Unfortunately, in my state, I'm ineligible to contribute to Social Security, so no pension
and no Social Security. However, I do live in a LCOL, low cost of living area, and I'm
recently able to save more than I spend – $40K per year into retirement accounts – and I'm
thinking about adjusting my portfolio to take the lack of Social Security or pension into
account. What do you think are the pros and cons of these ideas? All right, Anna. She's
saving $40,000 a year? Yeah that's excellent. Solid. Mid-40's? She's gonna be just fine.
What, why you rolling your eyes at me? I didn't roll my eyes, I smiled and then I'm
looking at the rest of her question.
Got it, whatever. (laughs) Okay. "Take a chunk
of my savings each year, $10k, and put it into I-Bonds creating a safe inflation-protected
bond ladder." Number one, what do you think about that idea? What's an I-Bond? Inflation? An I-Bond? It's like a double-E bond. It's
just a government bond. Never heard of an I-Bond? I have, I just can't answer the question without
knowing exactly what is. (laughs) Got it. Or maybe it could put it in "1," bonds
creating a safe inflation… but I believe it's I-Bonds.
I think it's I-Bonds. Yeah that's what it looks like, I-Bonds, so
I do believe, Anna, you should have some of your money in bonds. I don't know that you
necessarily need to buy a bond. I might buy a bond fund, and I might stay shorter-term
just because when you look at the long-term rates of bonds versus stocks, you don't get
much extra benefit, much extra income for a longer-term bond and you have a lot more
risk. But I do agree with putting some in bonds, and whether it's $10,000, that's about
25%. That could be about right. I disagree with that. You're mid 40s, Anna,
so you're a little bit older than me. (laughs) Not much. You got 20 years of work left.
I think as
you get closer to retirement you're going to need as much capital as you possibly can
to accumulate. So I get what you're doing here is you're saying I need a supplement
for my pension and Social Security, so let me put $10,000 a year in I-Bonds. I-Bonds
are paying, what, 2 percent? In 20 years, I don't think that's a good idea. I think
you want to continue to save the $40,000 in a globally diversified portfolio and don't
segment it. Don't try to bucketize this thing. You look for a target rate of return over
20 years, let's say, what do you think, Al? Globally diversified portfolio, 20 years,
call it six and a half percent? Are you fine with that? Yeah I would be fine with that. Okay. And then if she does that, she's got
$1.5 million.
I'm assuming she has money already saved. So that's if she started today and
she saved $40,000, and she got six and a half percent return on that $40,000 savings per
year. At the end of 20 years, she's got that. And if I take a 4 percent distribution from
that, that's $62,000. As a teacher I'm guessing, what do you make as a teacher – $80,000? $60, 70, 80. $80,000? I mean some administrators might
make $100,000 and some. Kinda depends on where you are in the country
too. And we don't know what state she's in. So I don't know, $62,000. That's, of course,
the future value of that… (Joe calculates) It's always good to do calculations on the
air, isn't it? (laughs) Yeah it is, here we can see it.
Uh-huh. It's about $42,000. Can you live off
of $42,000? If you're good then you're all set and keep doing what you're doing and have
a global diversified – don't try to segment. Yeah and that was assuming you don't have
anything saved now. But she's in our mid-40s and she's cranking
$40,000? She probably has some cash there. Number two question. "Use my tax-deferred
retirement accounts and combined short term TIP funds and long term TIP funds to create
a sort of liability matching strategy." Anna! Are you a pension hedge fund manager?? No,
I would not do that. She's trying to – this is what like big pensions do, and they match
ladders with liabilities, and the liability, in her case, would be an income stream or
income payment.
I disagree with that strategy as well. I like the TIPS though, what a TIP
is is a treasury inflated protected security Alan. Yes, that I knew. Okay. Any other comments on that strategy? No. Agreed. Okay. Her third comment is "more
is better." "Stick with the total return portfolio but
perhaps choose a more conservative allocation, say move to 50 fixed income 50 stocks to substitute
for Social Security. Cheers and thank you for all your work." All right Anna. Yeah. Now you're on the right track. But that's
too conservative. And that's assuming you have a 20-year threshold. Yeah, Anna, if you're retiring in the next
five years, well then all bets are off. Then just ignore everything that I just said. But
if you're retiring at 65, let's say. Because you're looking for a supplement of Social
Security.
I love the fact that you're concerned of saying you know what, I don't have Social
Security, I'm not going to have a pension, but I have all these supplemental retirement
accounts that let me put $40,000 in a year. If you continue to do that, I think you'll
be fine. And it sounds like she lives in, what did she say?
A low cost of living area. LCOL? FMO…? What are you trying to say, Joe? (laughs) I dunno. FOMO? Fear of missing out? Yeah that's what I meant to say. Okay. FOMO. Loco? Let me just say. if you do have 20 years,
I would go at a minimum 60% stocks. I might do 70 percent stocks, I might even do 80 percent
if I could handle the fluctuations. Volatility. Yeah. I have roughly the same
time horizon. My portfolio is 100 percent stocks. So there you go. All right Anna I
hope that helps. Good luck with everything.
Keep pumping away, keep saving..
Read More
Retirement Planning: Are you Ready for Retirement? with Oak Harvest Retirement Success Plan
user 0 Comments Retire Wealthy Retirement Planning
[Music] welcome to the retirement income show on Market Lane alongside the CEO and founder of Oak Harvest Financial Group that of course is Troy sharp Troy is a certified financial planner professional his team at Oak Harvest is incredible if you want to go to the website to learn more elk Harvest financialgroup.com Oak Harvest fg.com works as well a lot of great information on the website you can learn about Jared Kinney Ryan Kenny you can learn about Chris Paris Jessica canella the whole team there's just a phenomenal team Oak Harvest financialgroup.com and of course you can always go to the YouTube channel there's over 300 videos on there about any topic you can think about in the financial world the retirement world uh it's phenomenal and there's no cost you subscribe you'll know when all the new ones are out but there's no cost to any of that YouTube check out Troy sharp and Oak Harvest Troy's office located at 921 oral City Way I-10 and Bunker Hill they they are here for you if you need help they would love to help they just don't know if they can help until you reach out and you can do that just by giving them a call 800-822-64-34-800-822-64 34 today we're going to be talking the retirement success plan Troy is going to explain what this is and it's the process so it's about investment planning income planning tax planning health planning Estate Planning and they all go together Social Security and Medicare are in there as well you know you've done this for a long time you sat down with a lot of people so you kind of understand the common mistakes the common things that we Overlook as well this will be good going through the retirement success plan how are you going to inform us today of this retirement success plan well just like we have as humans we have basic needs right we have that hierarchy of we need shelter we need food we need security in retirement or once we get to retirement people have their the same concerns the same questions we all have the same let's call it fears do we have enough you know can you retire when can you retire how much can you spend when you do retire without the fear of running out of money we all want to pay less tax right the government can get their fair share but not a not a penny more and whatever that fair share is it's it's defined differently based on your plan so if you take the government's plan there they want to get as much from you as possible and the tax law is set up in a way that if you don't plan for taxes in retirement oftentimes we see people in situations where if they keep doing what they're doing 200 300 500 800 we sat down with a client prospective client recently and we're doing this analysis it was well over a million dollars in taxes if he kept doing the his way of things the way that his advisor had him doing it in regards to his income plan and tax plan and retirement well there was no tax plan obviously but his income plan was going to lead create this domino effect of his tax bill being over the course of time over the course of 25 years over a million dollars in estimated taxes that he was going to pay that he simply didn't have to pay if he went about a different approach the approach that I'm going to talk with you about today as far as step three of our retirement success process the tax planning aspect so just like we have basic needs as human beings we have basic concerns when it comes to retirement and we've created the structured process and that's the beautiful thing about the retirement success plan is it's a plan that is something that is actionable but it's also living and breathing it's something we will review with you throughout the year once you're a client but it's also a process and we believe in structure here we're really big on structure and process and that keeps us organized that keeps us on schedule and that keeps us ahead of the planning curve in order to do the things that we promise for everyone that's entrusted so much to us and I'm talking about your retirement you worked for 30 years 40 years 50 years in some cases and you save up whether it's five hundred thousand dollars or five million or 50 million you need a team of people that of course are knowledgeable but before education and certifications and designations and training and experience first and foremost you need somebody that cares okay if you start there with someone that's a fiduciary and not just you can be a fiduciary and still do the wrong thing I've seen it for years in the industry where fiduciary advisors still sell mutual funds that have high fees and commissions and they can make justifications for why they're selling them or why they think you're they're in your best interest I don't believe that they are personally um we would never put someone into a mutual fund that is charging a five percent front end commission and then you know has two or two and a half percent of hidden fees and we've seen that for for years coming from fiduciary firms fiduciary advisors so you start with from Ground Zero are you working with somebody who truly cares who's truly passionate about retirement so with that philosophy in mind that's the foundation of of what we look at when we hire people here at Oak Harvest Financial Group you could have all the designations in the world all the education all the experience but if if you're arrogant if you're not humble if you're not hungry if you're not continuing strive to be continuing to strive to be a better person we don't want you to work here because that foundational element do you care about the people that you're working with on a human level if that's not there then you know we don't want any part of that type of person I don't care how much you produce how what the metrics are when it comes to how we measure advisor performance so that's the foundation now once you have someone that cares you want a structured process in place to deal with those big questions that you have the big concerns that you have so do you have enough yet it's not just a yes or no question it's a function of how much do you spend what is your health situation if you're healthy yes of course you're going to live longer most likely but are you planning for the increased medical costs in increased probability of needing long-term care or Assisted Living these are aspects that healthier people do have to absolutely be concerned about those that are less healthy it's less likely you're going to have a two or three year four or five year stay in a long-term care facility or need nurses in the home so when we talk about do you have enough and can you retire these are all the answers to those questions are function of how much do you spend what is your longevity what is your health situation your of course your family history um but not only that it's what are we doing with the other aspects of this process meaning the income planning side the tax planning side what about the health care side you know are you retiring before Medicare do we need to look at some type of Health Care planning that qualifies you to receive a subsidy so you're not paying two thousand dollars a month for both spouses for health insurance that maybe we get it down to 400 a month or 600 a month or maybe no out-of-pocket costs whatsoever for health insurance premiums you can do that with proper planning but you need the right type of asset structure meaning if you have all your money in retirement accounts this is where tax planning comes in when you take money out that goes on to your 1040 your tax return and then you probably aren't going to qualify for as big a subsidy as if you had money saved and non-ira accounts so this the structuring of income planning tax planning Health Care planning and then of course the estate side of things this is all what the oak Harvest retirement success process the retirement success plan is and that's what you receive when you become a client it is a very clear and structured process that we go through but then it's also a plan that is living and breathing and we're making adjustments as time goes on tax law changes economic conditions change goals change your spending levels will change it retirement is and we've only learned this you know from years and years of experience the best delayed plans we can't just set him and forget them you know plans need constant monitoring just like a plant or a garden or you know a human being so the retirement success process we're going to get into today to to today we're going to focus on the first three steps the first step is risk management and investment planning next step is income planning so income planning is social security when do we take that it's not just based on the math which it does play a role but when we start to look at are you a conservative investor okay versus an aggressive investor investor that plays into the Social Security election decision of course your Health and Longevity plays in market conditions okay are we in a recession when you're thinking about taking social security are your accounts down 20 30 percent or did we have a really really good year last year and it looks like we're gonna have a good year this year all of these factors kind of tie in to that income planning component as well as many other we're going to talk about and then the big one we're gonna we're gonna get into is tax planning that's step three of the retirement success process and when you start to understand that retirement is a set of dominoes when you're young you work you put the kids through school you deal with traffic you deal with bosses you deal with if you run your own business all the headaches that come with that you deal with so many different things money is really really simple it's life that's complicated in the accumulation phase once we get to retirement now life gets a little bit more simple it's the money it's the decisions you have to make and the realization that every single decision you make how you invest the portfolio impacts not not only how much income you can take today but how much income you can take down the road the sequence of returns risk based on how you've invested sequence of returns is if the market goes down and you're also taking money out you exacerbate that downturn in the market because there's no paychecks coming in you're you're pulling money out and losing in the market so these decisions every single one that you make it's a domino effect it impacts everything else it impacts the tax plan it impacts the income strategy can impact the health care it can impact absolutely the estate plan so we walk you through this process so we have a plan in place we call it the retirement success plan and the goal is for you to have security first and foremost but what I find most often is the outcome is that people feel more comfortable they feel more secure and they're able to enjoy retirement a bit more because they've they have a plan in place that addresses all these certain needs but also through the continual monitoring and adjusting and conversations one thing I love about our process is when someone comes to us and we have that first meeting where it's just get to know you you know no pressure no obligation no cost we get the information we do an analysis between that first and that second visit and then when we come back on that second visit you actually get to see what it's like to be a client at Oak Harvest Financial Group because that second visit with us we're starting to go through the foundation of a financial plan we're starting to discuss the decisions that you have to make not only this year but in the future so that's almost exactly what it's like to have an annual review with us or a semi-annual review with us so I love that about our process is that you get to see before you ever decide to become a client what it's like to actually be a client when we have up on the big television screen all of the information the choices you have to make the impact of making different decisions how it impacts your taxes how it impacts your income how it impacts your account balances when we do a sensitivity analysis and and show you okay this outcome in the market and this outcome for income decisions versus this one here are the possible outcomes for those choices and that those combination of choices so you get to see what it's like to actually be a client just through our normal process of going through that first second and third visit with us many Engineers it takes a little bit longer than that sometimes it's four or five visits but our goal is to Simply provide value we want to make deposits in your life we want to provide value and you know people see that value and they say you know what I think you guys could be a great part of my financial team my retirement team and yes I want to work with you Troy so if that's you if you don't have a retirement success plan if you don't have a tax plan income plan if you don't understand the guard rails what I'm going to get into in this next segment as far as risk management in retirement give us a call we want you to leave a message there's no one here working on the weekends if you're watching this on YouTube if you're listening to this later and it's during the week sure give us a call someone will pick up but we want to have a conversation just to see what's important to you who you are if you're a good fit for what we do and of course you can ask questions to see if we're a good fit for you and then we'll schedule that first visit there's no cost no obligation we can do it through Zoom we can do it in person at the office right here at I-10 and Bunker Hill in Memorial City and that first visit we'll have a cup of coffee a glass of water and just get to know each other and if we are a good fit at that point we'll get that second scheduled we'll do the analysis that I talked about and we'll walk you through that retirement success process so you can have those big questions answered do you have enough can you retire and how do you pay less tax 1-800-822-6434 1-800-822-6434 Oak Harvest Financial Group check out the YouTube channel check out the website Oak Harvest Financial Group so when you think about this this is what I think you should really like about it it's you're working with the team at Oak Harvest for your retirement right to coming up with that retirement success plan you're the CEO it's your retirement look at Troy and the team at Oak Harvest as your Chief Financial Officer here to help guide you you're going to make the decisions they're going to give you the choices right and it's up to you because it is your retirement it's your hopes and dreams your bucket list and all of that it's really important though that they understand your feelings your thoughts your hopes your dreams it is about you so you've got to talk to them and they're here to listen and they're here to help again that number is 800-822-6434 risk management how important is it what actually is it Troy we'll explain when we come back this is the retirement income show with Troy sharp out of Oak Harvest Financial Group back right after this investment advisory services offered through Oak Harvest Financial Group LLC Oak Harbor's Financial Group is an independent Financial Services firm that helps people create retirement strategies using a variety of insurance and investment products investing involves risk including the loss of principal any references to protection benefits or lifetime income generally refer to fixed Insurance products never Securities or investment products insurance and annuity product guarantees are backed by the financial strength and claims paying ability of the issuing insurance company Oak Harbor's Financial Group LLC is not permitted to offer a No statement made during this show shall constitute tax or legal advice you should speak to a qualified professional before making any decisions about your personal situation we are not affiliated with the US government or any governmental agency this radio show is a paid placement foreign [Music]

Perks Of Retirement | Sarah Millican
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– But you know we're all getting older, I turned 39 this year, not worried about turning 40 next year. I'm not worried about getting older at all and I think that's because I have good friends in their 40's, 50's, 60's, my parents are late 60's, early 70's and they all seem to be having quite a nice time. What is see is my future is not a scary one. My parents have this thing that I think happens to a lot of people when they retire, is all of a sudden, they can see their friends a lot more often, they can do hobbies they've never had time for and they're so busy, they think to themselves, how on Earth did we fit work in, which must be a lovely state of affairs, mustn't it? Me mam was showing us her diary 'cause she said it was choc-a-blok.
She said, look at this. She said, we were gonna go see Oliver, The Musical that day but we can't because we forgot we had Swan Lake booked in at The Empire. She's only this tall, she looked up at me with this face that I adore and she went (laughing) I haven't got time to die. (laughing) I said, I don't think that's how it works, mam. (laughing) Just the Grim Reaper standing by and just going, I cannae do October. (laughing) I cannae do November.
(laughing) Goin' to see Tony Bennett in November. The Grim Reaper's like, Tony Bennett, I've been after him for years. (laughing) But for the last 16 or maybe even 17 years, my mam and dad's annual holiday has been one week in Edinburgh. They love the city, they have friends there, they go, they have a smashing time, they come home, all good. But for some unknown reason, two years ago they decided to book a cruise and I said to me mam, that's very adventurous, what made you book a cruise? And she said, we just saw them loads on the telly and I said, yeah mam, I'm pretty sure that was the news. (laughing) They were running aground and people were dying and me mam and dad are like, that looks lovely, shall we do that? (laughing) My parents-in-law have a similar joy for life, they have a real knack for being able to turn a bad situation into a good one.
I think it's something we could really learn from, all of us, I think. I'll give you an example of this. They're both semi-retired and my father-in-law was caught speeding. Now I don't know if you know this, I didn't know this, that if you're caught speeding and you choose to do the Speed Awareness Course, that you have to do it in the town where you were caught as opposed to where you live, if it's different.
They're based in the Midlands, he was caught speeding in Bournemouth. And my mother-in-law said to me, we've decided to make a weekend of it. (laughing) Isn't that adorable? (laughing) But I know getting older is no plain sailing, I know that there are problems along the way. One of my friends is in her 60's, have we got any women who are 60 or above, give us a cheer. (crowd cheering) Few of you, so maybe you can vouch if this is true or not. One of my friends, she's 62 and she said, there's something I need to tell you, I said, that sounds really serious, is it serious? She said, well, I just don't want it to come as much of a surprise to you as it did to me. I said, okay, well you better tell us what it is then. She said, when you get to my age, down there, instead of it being a lovely, healthy pink colour, I could have walked away right then and there. (laughing) Whatever you've got, I don't want to know.
(laughing) Instead of it being a lovely healthy pink colour, it's more of a slate grey. (laughing) It's the detail that I love, she didn't say grey, she said slate grey. (laughing) Like she'd had the Dulux colour chart out. (laughing) Here Terry, look at that. Do you think that's Thunder or Slate? (laughing) I was so horrified by what I just learnt that I blurted out, you mean like when meat's on the turn? (laughing) Does that smell all right to you? (laughing) There'll be a few handbag mirrors coming out when they get in tonight I reckon. (laughing) But my mam is, my mam is nearly 70 and she's in a wheelchair and sometimes people are mean to her because she's in a wheelchair, which is horrible and hurts all of us, but her especially and I was trying to think of just some small way that she could retaliate when that happens to make her feel a little bit better, you know, and I was trying to teach her the cough swear thing, you know the cough swear thing? [ __ ].
(laughing) Tryna teach her that, 'cause she's always so immaculately dressed and her nails are always perfect and I thought, nobody for a second would suspect, they'd be like, did that lady just? Did she just? [ __ ]. Did she just? No, look at her nails. (laughing) Give her a lozenge. So we talked about it, we laughed about it, we moved on our conversation. About 10 minutes later, talking about something entirely different and me mam said, had to go to the doctors this week. I said, oh, is everything all right? She said, yeah, but I had to see the nurse. I said, oh, is that not good? She said, oh, it's the one I don't really like. I said, oh, never mind. She said, yeah, you know the one I think's a bit of a [ __ ]. (coughing) (laughing) What have I done? (laughing) She did the cough like it was a full stop.
(laughing) Hello, it's Sarah Millican here. Please make sure you subscribe to my channel to stay up to date with all of my latest videos. Don't forget to like, pop a comment below and why not stick around to watch a few more? I'm sure those emails or those dishes can wait a bit longer..
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Member retirement process
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it's time for a fresh take on retirement at Catholic super we don't believe people retire it isn't about bowing out stepping down or pulling back retirement is a time of promise and possibility a chance to re-fire rewire renew so what might your retirement look like whether it's years away or just around the corner it's never too early or too late to start planning your next chapter start by asking yourself what type of Lifestyle do you want to have and how much income will you need to support it will your superb be enough where does the age pension fit in how will you invest your money in retirement and how will you transition your money there's a lot to consider but you're not alone a Catholic super we've helped thousands of Australians retire with confidence make a start today use our online retirement income calculator to see how you're tracking so far explore our knowledge Hub to learn more about retirement what's involved and how to prepare book an appointment with one of our financial advisors an initial appointment is available at no extra charge simply complete our online booking form or call us directly on 1-800-065-753 and let's start writing your next chapter foreign

5 Best Fidelity Funds to Buy & Hold Forever
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today we're going to talk about the five best fidelity funds to buy and hold forever hi if you're new to the channel my name is tay from financial tortoise where we learn to grow our wealth slow and steady in order to guide our conversation i'm going to use the three fund portfolio strategy to frame the fidelity funds i'm going to recommend in this video the three fund portfolio is one of the most popular do-it-yourself investment strategies and as the name implies it's made up of three simple funds most often an equities fund an international fund and a bond fund so all the funds i'm going to recommend today will fit into at least one of these slots the first fidelity fund you want to buy and hold forever is fidelity's u.s bond index fund fxnax it tracks the bloomberg barclays u.s aggregate bond index which is composed of investment-grade government bonds corporate bonds and mortgage-backed securities it holds approximately 8 400 bonds the top issuers are the u.s treasury or issuers of mortgage-backed securities like fannie mae and freddie mac it has an expense ratio of 0.025 percent which means if you have 10 000 invested in fidelity us bond index fund you're essentially paying 2 dollars and 50 cents for fidelity to manage this fund for you the fund started in 1990 and since then its average annual total return has been 5.33 percent so what are bonds and why do you need them in the simplest term bonds or loans when you buy bonds you're essentially loaning money to someone in this case to a company or a government agency and they're a very important addition to a well-constructed investment portfolio because of how different they are from stocks a good analogy i like to use to frame stocks versus bonds is this think of stocks as your core wealth building engine without it you aren't really going anywhere and bonds are like your brakes without it you could drive yourself off the road when you have bonds in your portfolio it helps to smooth out your investment ride because though they have lower returns they have less volatility during times of market crash where your stock investments can dip by 20 to 30 percent your bond investments will hold steady and ensure your right is so rocky so in order to help you smooth out your investment right you want to start adding them to your portfolio as you get closer to retirement age and if you're invested in fidelity consider fidelity u.s bond index fund as your core bond holding in your portfolio the second fidelity fund you want to buy and hold forever is fidelity total international index fund ftihx the fund tracks the msci all-country world index excluding the united states it represents approximately 5 000 international companies the top companies in this fund are made up of companies like taiwan semiconductor nestle and asml holdings it has an expense ratio of 0.06 percent which means that if you have 10 000 invested in ftihx you're essentially paying six dollars for fidelity to manage this fund for you the fund started in 2016 and since then its average annual total returns has been 5.99 what the fidelity total international index fund will do for you is provide you exposure to the international market outside the united states exposure to different countries sectors and even currencies and we can look at what happened to the japanese stock market as a lesson on why we might want to hold an international fund at the end of 1989 the japanese stock market's capitalized value was considered the largest in the world the nikkei 225 index the index of 225 largest publicly owned companies in japan reached an all-time high of close to 40 000.
Sadly 22 years later the nikkei was under 8 500 and to this day has yet to reach its all-time high again but satur is a japanese investor who failed to invest in international stocks outside of japan the us-based companies are currently the world leader in market capitalization and revenue but who can confidently say that will stay like that in the future it would be unfortunate but the same thing could happen to the u.s stock investors i personally still have strong confidence the u.s economy and u.s based companies as a whole but i also have to continuously check my assumptions financial writer larry swegel had a saying never treat the highly likely as certain and the highly unlikely as impossible as you get more comfortable with the international market you can start adding them to your portfolio and the fidelity total international index fund is a great option to represent your international holdings the third fidelity fund you want to buy and hold forever is fidelity zero total market index fund fzrox the fund tracks fidelity's in-house fidelity u.s total investable market index it represents approximately 2 700 u.s based companies the top holdings in this fund are apple microsoft and amazon it has an expense ratio of zero percent yes you heard me right zero dollars to invest in fidelity zero total market index fund thus the zero in its name the fund started in 2018 and since then its average annual total returns has been 11.82 the fidelity zero total market index fund is a total market index fund which means it tracks the total u.s stock market so this will be a great option as your core equities holding in your three fund portfolio however there are a couple things i do want to note with this fund especially in comparison to the two other equities options i'll cover here in a bit one is the fact that the index it is tracking is fidelity's in-house index fidelity u.s total investment market index this necessarily isn't a bad thing but there are actually more than 2 700 publicly traded companies in the united states than what this fund represents what this fund has done is exclude really small companies from its index in a big scheme of things this doesn't make that much of a difference in performance since the representation is based on market capitalization so the excluded companies would only represent maybe one percent or even less than that of the total fund but this is still something to note the total market here isn't quite the total market a second item to note with the fidelity zero total market index fund is the fact that you can't transfer your shares to another firm without selling your holdings and when you sell your holdings you have to pay taxes on your capital gains the fidelity zero total market index fund was designed with zero percent expense ratio in order to gain more customers so fidelity doesn't want you to move your money to a different firm and this limitation creates that barrier paying zero percent is nice but you won't understand that free comes with some strings attached but if you're planning to stay with fidelity for life fidelity zero total market index fund is a great equities fund to hold the fourth fidelity fund you want to buy and hold forever is fidelity total market index fund fskax the fund tracks the dow jones u.s total stock market index it represents approximately 4 000 u.s based companies the top holdings in the fund are apple microsoft and amazon essentially the same as fidelity zero total market index fund it has an expense ratio of 0.015 percent which means that if you had 10 000 invested in fidelity total market index fund you're essentially paying 1.50 for fidelity to manage this fund for you the fund started in 1997 and since then its average and annual total return has been 8.29 it's fidelity's original total market index fund prior to the introduction of fidelity zero total market index fund and fidelity total market index fund does exactly what his name implies invest in the total u.s stock market essentially every u.s based companies out there when it comes to investing in the stock market the key principle you want to abide by is diversification many people tend to think the only way to make money in the market is to beat the market by either selecting good stocks or good actively managed mutual funds unless you're a professional investor with hundreds of analysts working for you around the clock analysts who are constantly interviewing and researching companies and industries we can't win in the stock picking or fun picking game the odds are just stacked too high against the individual investor so the best strategy to beat wall street is to just track the market and at the lowest cost and fidelity total market index fund is a great fun to hold as your core equity is holding in your portfolio if you want more flexibility from the fidelity zero total market index fund the fifth fidelity fund you want to buy and hold forever is fidelity 500 index fund the fund tracks the s p 500 index which represents the 500 largest publicly traded companies in the united states at the time of this video there are exactly 508 publicly traded companies in this fund the top holdings in this fund are apple microsoft and amazon essentially the same as fidelity zero total market index fund and fidelity total market index fund not a surprise given the company representation is based on market capitalization and these big companies represent a good percentage of the market as a whole it has an expense ratio of 0.015 percent same as fidelity total market index fund so if you have ten thousand dollars invested in fidelity 500 index fund you're essentially paying dollar fifty for fidelity to manage the fund for you the fund is the oldest of the bunch it started in 1988 and since then its average annual total returns has been 10.66 percent when most people talk about the stock market they're most often referring to the standard and poor 500 not the total market index and the reason is because it's so much older it was created in 1926 when it began tracking 90 stocks and in 1957 the list expanded to 500 and for the past century it has been the go-to index to represent the stock market when you turn on any financial news reporters are always discussing how the s p 500 is up 50 points or down 100 points it essentially represents the 500 largest u.s corporations weighed by the value of the market capitalization and because it's weighted by market cap though there are approximately 4 000 publicly traded companies in the united states total these 500 stocks represent about 80 to 85 percent of market value of all u.s stocks and the weight within the index automatically adjusts based upon the changing stock prices to this day the s p 500 remains a standard to which professional mutual fund managers and investment firms compare their returns against so if you want your equities holding to match the performance the largest u.s stocks since they're essentially what moves the market hold fidelity 500 index fund as your core equities holding but i do want to say this whether you choose the fidelity 500 index fund the fidelity total market index fund or the fidelity zero total market index fund as your core equities holding you really can't go wrong with any one of them they're all great funds you just want to understand exactly what you're buying that's it guys i know i normally advocate for vanguard funds but sometimes you may not have the ability to choose the investment firm that you want because maybe your employer doesn't offer it that was the case for me and therefore most of my 401k is actually invested in fidelity fidelity is a great investment firm if you're looking to invest with them pick any of the five that i mentioned here and you can't go wrong if you'd like to learn more about the three fund portfolio and why you might want to consider it as your strategy check out my video here thank you guys for watching until next time all the best
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