Are Your Investments Working for You?
You’ve worked hard for your money, right? We think it makes sense, then, that your money works hard for you. With several hundred — if not thousand — investment options out there, it can be difficult to determine which ones are best for you.
But don’t worry, we’re here to help! Below are a few points to consider when investing.
Have you maxed out your 401(k) contributions? This employer-offered investment vehicle allows you to use pre-tax dollars to invest towards retirement. When it comes time to take a distribution, you’ll be taxed at your appropriate tax bracket then, but for now, enjoy using that tax-free money to grow your retirement account.
A good way to ensure you investments are paying off is to review the expense ratios of any mutual funds you might have. Expense ratios are essentially the cost for investing in that fund. Competition has increased, causing expense ratios to decrease, so lower-cost mutual fund options may be available.
If you take that into account with compounding your earnings over time, the savings can really add up!
Limit Your Trading
No matter your investing style, the more you can limit selling and re-buying into a position, the more you’ll save on frictional costs. Frictional cost is the cost associated with buying and selling assets, which can quickly add up if you’re not careful.
Luckily, many 401(k) plans won’t charge for asset movement, but you are limited to the amount of times you can transfer or reallocate. This is done to benefit the plan participants, as it lowers costs and offers better options.
No Early Distributions
Lastly, if you are invested in a retirement account such as a 401(k) or IRA, make sure you do not take premature distributions, as these can come with steep penalties including additional tax. There are a few exceptions to this rule, but otherwise you’ll want to wait until retirement age before withdrawing.
Investing properly can save you money, which in turn allows you to put it to work in your investment portfolio. There’s nothing wrong with saving a penny here and a penny there, because after 40 years of investing, those few pennies can add up to a whole bunch of dollars.
Let’s Get It Going!
Schedule a no-cost, no-obligation financial review with an advisor today either online or by calling the Program Coordinator at 847.538.5124!
Andigo Investment Advisors are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, D/B/A Andigo Investment Advisors, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution.