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Articles: Are you in it for the long haul?

We can’t predict with 100% accuracy how events halfway across the world are going to unfold, whether the stock market is going to go up or down, and whether the economy will pick up or not.  But we may be able to help you put together a financial plan  based on common sense, investment objectives and your overall circumstances.  If you stick reasonably close to the plan, you should be in pretty good shape in the long run.

Here are several ideas that may provide the foundation for a solid financial plan.

Contribute to a retirement plan.  Do not underestimate the value of taxdeferred compounding. For instance, if your company has a 401(k) plan, you can set aside up to $17,000 in 2012 ($22,500 if age 50 or older) of your salary each year without paying any current tax on that amount.   Your money grows tax-free until you withdraw it usually when you are in a lower tax bracket.

Save regularly.  Frequently, people
think of savings as a luxury item.  But that kind of thinking can catch up with you down the road.  A monthly contribution to your savings account may be just as important to your financial plan as paying your bills.  If you make a habit of saving on a regular basis, you will find that even the smallest amount can add up to a substantial sum in a short time.  Obviously, smart investments can help your savings grow even further.

Keep good records. What does paperwork have to do with investing?  The records you keep regarding charitable contributions, home improvements and the like can help reduce your tax liability. And money saved can be money invested. Better in your pocket than in Uncle Sam’s.

Reduce your debt load.  That same philosophy holds true when it comes to your debts.  Wherever possible, reduce or eliminate your credit card and auto loan debts.  For one thing, the less you owe, the more you can save.  Also, the interest paid on personal debts generally cannot be deducted on your tax return.

Stay on top of new developments. If the situation dictates it, you may have to modify your plans somewhat.   That means staying abreast of current events and maintaining contact with your investment advisor. For example, you can keep a close eye on the rates offered on bank accounts, money market funds, Treasury securities and the like.  This information usually is readily available. Don’t hesitate to call and find out if a change of venue
for your money is advisable.

Maximize company “extras.” This includes such old standbys as group life insurance and health insurance plans.  If your company offers the option, consider a flexible spending account (FSA).  This is an account that you set up with pre-tax dollars to pay for medical or child care expenses as they occur during the year.  The account is funded through regular payroll deductions.   However, keep in mind that an FSA reduces your
take-home pay accordingly.  What’s more any money in the account that is not spent by the end of the year is forfeited. (A 2½  month grace period may be allowed.)

Set up a meeting to map out a long-range plan.  Once your plan is in place, see things through.


This newsletter/advertisement is produced for our clients, friends and associates through an arrangement with WPI Communications, Inc. for the representatives’ use. Although the editorial content is professionally researched, written and edited, neither our firm nor any of its agents, representatives or associates make any representations regarding the accuracy of the content or its applicability to your situation. The information in this communication is not intended as tax or legal advice. In accordance with IRS Circular 230, the information provided herein may not be relied on for purposes of avoiding any federal tax penalties. Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of 1) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or 2) promoting, marketing or recommending to another party any transaction or matter addressed herein. You are encouraged to seek tax or legal advice from an independent advisor.

 

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