The 10 Best Low Risk Investments for High Return

best low risk investments with high returnThe first time I stood at the top of the high dive at the rec center pool, I was a nervous wreck.

I never realized how afraid of heights I was until that moment.

For many that have never invested before, they feel this same apprehensive feeling.

With the rising cost of living, it’s imperative that we invest (preferably with the lowest risk possible) to generate high yield returns.

High rates of return on your investments are wonderful because it means you don’t have to invest as much capital to reach your investing goals. Yet the higher return you want the more risk you take to get that return.

As you near or enter retirement (or if you are managing investments for your high school senior’s college fund) your appetite for risk drops precipitously. You simply cannot afford to see a huge drop in the market right before the time you need to begin withdrawing funds from the investment accounts.

Instead, you need to shift to low risk investments. These types of investments will generate a lower return because you aren’t taking as much risk, but you’re okay with that. At this time capital preservation is more important that astronomical growth rates. You need to know your account won’t drop 25% in a year and severely impact your investing goals.

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Can You Rollover Your 401k to a Roth IRA?

Typically, most people will initiate a 401k rollover to a traditional IRA.

A common question that I’ve been getting lately is,

“If you can roll over your 401k into a Roth IRA then how you do it?”

401k rollover into Roth IRA

Whenever you leave your job, you have a decision to make with your 401k plan.

A variation to that is if you have been contributing to a Roth 401k…..then what are your choices?

Let’s see if I can help you make “cents” of the situation. Here’s how you roll over 401k into a Roth IRA.




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Are Roth IRA Contributions Tax Deductible?

Are Roth IRA contributions tax deductible?

The simple answer is no. But a more nuanced answer will note that although Roth IRA contributions themselves are not tax deductible, you can claim a Roth IRA tax credit or a claim a loss on a Roth IRA if eligible.

So let’s take a look at the various options at your disposal.

Non-Deductible Roth IRA Contributions

Unlike 401k or Traditional IRA contributions, Roth IRA contributions are not tax deductible. According to the Roth IRA funding rules established by the IRS, all your contributions must be made with after-tax dollars.

For example, let’s say you earn $40,000, and you’re in the 25% tax bracket. If you want to make a $5,500 tax deductible 401k contribution, you’ll put $5,500 in your 401k first and then you pay your taxes, which leaves you with $25,875 (75% of $34,500).

However, if you make a $5,500 non-deductible Roth IRA contribution, you’ll pay your taxes first, which leaves you with $30,000 (75% of $40,000). Then you’ll make your $5,500 Roth IRA contribution, leaving you with $24,500 in disposable income.
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Online Broker Comparison – Which Online Broker Should I Open an Account With?

online broker comparisonFinding a great online brokerage firm to hold your Roth IRA, Traditional IRA, or just general trading account is a daunting task. Each broker tailors their website to show off their strengths and hide their weaknesses in comparison to their competition. Comprehensive fee information is hidden deep within the website; sometimes you specifically have to do a Google search to find the page with the entire fee and commission agreement. Simply put, this is not how it should be. We believe transparency and easy to navigate websites should be the norm with brokerages. Until that time comes we have done the research for you. (You can thank us later when you retire on your own island, ok?) We’ve just launched a new online broker comparison page that will be kept up to date with the latest information on the best brokerage firms available. Below you will find a comprehensive review of the most critical aspects to look at when selecting your online broker: [Read more...]

5 Things You Need to Know About The Traditional IRA 2014

traditional ira rules and limitsYou know how much I love the Roth IRA.  Love, love, love it!!

I’m actually more in love with the Roth IRA than I am the 401k.

And you already know how I feel about target date mutual funds.  <blah!>

But what about the Traditional IRA?  Does it still have it’s place in your retirement plan? You betcha!!

If you are fortunate to work at a company that offers a match on your 401(k) deposits, don’t walk away from that free money. There, however, might be some instances where the traditional IRA has its place.

Here’s a closer look at some of the rules of the Traditional IRA Account.

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Don’t Miss the IRA Contribution Deadline

IRA deadlinesDon’t miss the 2013 IRA deadline and cost yourself saving more for retirement.

In the haste of getting all your tax documents in order to meet with your tax preparer, don’t forget about making your IRA contributions for the 2012 tax year.

If you didn’t know, even though you haven’t opened an IRA account yet, you can still do so and still be eligible to make a contribution for 2012 – this applies both to traditional and Roth IRAs.

Taxpayers will have until Monday, April 15 to make their 2012 IRA contributions. Even if you are just now opening an account you want to contribute toward last year first. Once the deadline passes you cannot contribute for that tax year in the future.
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Investing in Your 20′s and How to Avoid the Ramen Noodle Dilemma

As a child growing up, I remember my father constantly eating Ramen Noodles in a Styrofoam cup.

It was pretty fascinating that all you had to do was add hot water, and presto, you had a ready to eat meal in a few minutes.

Perfect for an impatient kid!

As I got older I started to notice that the package of Ramen Noodles still existed in our kitchen.

Ramen Noodle Dilemma

My father had always struggled with money.

He had battled credit card debt and never really made good financial “cents” of his money.

I guess I always just thought that he really liked the cup of Ramen Noodles.

I later found it there was much more to the story.
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Start Saving For Retirement Today: Best IRA Online Brokers

best ira online brokerAs a financial advisor one of the biggest frustrations about our industry is for the young investor that want to get started investing into an IRA.

Why is it frustrating?

Because most big firms don’t want to help new investors.

Otherwise known as “small investors”.

Yes, you can walk into an Edward Jones office and open an IRA, but you’re going to have to pay an annual custodial fee.

They aren’t the only ones.  All big brokerage firms will charge $40-$75 per year just to have the account open.

In addition, some firms will charge you a small account fee if you don’t generate enough commissions or fees or the year.

Over and above that, you’re either going to have to pay a commission for each mutual fund, stock or ETF trade that you place or you have to pay an advisory fee which will be anywhere from .75% to 1.5% of your account balance.

Cha-ching!

As you can see, yes you can open the account with a big brokerage firm, but they’re going to gouge you in fees making it nearly impossible for any new investor to make any money.

So what’s the alternative?
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Average Retirement Savings by Age – How Does Your Savings Stack Up?

average retirement savingsYou’ve been busting your butt, scraping by, trying to save as much as you can into your retirement accounts, but you never feel like it’s enough.

Money is such a taboo subject that most of your co-workers don’t feel like opening up about how much they have saved (or how much they wish they would have), so it’s tough trying to gauge if you’re even in the ballpark of actually retiring one day.

How do you know how you compare to the average retirement savings figure?

According to a recent survey, 51% of workers over the age of 55 have less than $50,000 saved for retirement. And 39% in that same age group have less than $25,000 in retirement savings. Those are frightening numbers if you consider that those people are very close to the typical age of retirement.
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Best Places to Open a Roth IRA

Do you know what your income tax rate will be in the future?

The answer to that question is key to your retirement planning. If you think your tax rate will be lower in the future then it makes sense to avoid paying tax now through a tax-deferred investment vehicle like a Traditional IRA.

The Roth IRA Movement

The Roth IRA Movement

But with a mounting national debt, many people believe personal income tax rates will eventually be forced to increase.

Even if the national debt somehow gets taken care of, the government doesn’t tend to lower a tax once it is set.

If tax rates are going to go up the best retirement account for you to open if you qualify is a Roth IRA.

You will pay income tax today and never pay income tax on your nest egg again.


Where to Open a Roth IRA

Once you’ve made the decision to open a Roth IRA there are a number of companies that are happy to accept your contributions. The number of options you have can be overwhelming: do you go with a discount broker, a full-service broker, or direct to a mutual fund company?

We’re here to help you cut through the confusion to find the best company to open a Roth IRA with. (Just getting started investing? Check out our Best Online Brokers for Beginners.)
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