What is an IRA?
An IRA stands for an Individual Retirement Account. This type of account allows you to deposit a certain amount of your annual income into an investment account before taxes. The Federal government allows pre-tax saving for your retirement years, and the returns are tax-free. There are several types of IRAs—Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. Each has different rules regarding eligibility, taxation, and withdrawals. Also, these rules are subject to change by Congress, so it is best to have a tax consultant who can advise you on deposits and withdrawals.
Did you know that your 401k is a type of IRA?
Many new retirees have built up substantial savings in their 401k accounts but want greater flexibility with their investment choices. The good news is that you can move this money into a newly formed IRA account without any tax penalty.
What Should I invest in?
The type of stocks and bonds you own will depend on a combination of your risk tolerance and the opportunity available in the financial markets. There are times when bonds are better than stocks and vice versa. I work closely with clients in setting up strategies that can depend upon many variables, some of which may be particular to that client.
Should I own mutual funds?
The short answer on this is no. There are many products such as ETFs (Exchange Traded Funds) that give the same exposure with lower fees. In my experience, most mutual funds do not beat the broader indices and are an inefficient way to be long the stock or bond markets.
What is technical analysis?
I use this type of analysis extensively, as it helps filter out stock investments that are out of favor with investors. Essentially, technical analysis tools are used to scrutinize the ways supply and demand for a security will affect changes in price, volume and implied volatility.
What is fundamental analysis?
Fundamental analysis is the traditional approach of evaluating a security’s value based on business results such as sales and earnings. This approach is used heavily by bond investors who want to ensure their principal is safe and can be repaid by the borrower (with interest).
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