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A Proven Coaching, Plan and System for Your Life’s Financial Report Card, Revenge or Legacy
In this message we will focus on you having a $1 million to $10 million net worth and the U.S. net worth percentiles of what most Americans think the magic number is to be considered rich.
For the record, we believe having at least 10 million dollars is the ideal amount of money to retire early today. Given interest rates have come down over the past 40+ years, the value of cash flow has gone up. Inflation is also pick up.
Retirees and investors need a lot more capital to generate the same amount of risk-adjusted returns.
$10 million can currently generate about $350,000 a year in risk-free income and up to $470,000 in low-risk income based on today’s interest rates and yields. With $350,000+ in income, you should be able to live a wonderful life, especially if you don’t have debt.
Today, in a big city you need about $300,000 to live a middle-class lifestyle with a mortgage and two kids. The question becomes, if you had 10 million dollars, what would you do with it?
Freedom With Your $10 Million
Going through this fun message makes us re-appreciate the value of freedom. If you have all the money in the world, but don’t have the freedom to do what you want, is it really worth being so rich? We don’t think so. Do your best to optimize your life for freedom while discovering what is the minimum amount of money you need to be happy.
Because we already have the freedom to choose how to spend all our time, $10 million doesn’t do much to change our life. However, if we were stuck in a job we didn’t love, then we’re sure we’d negotiate a severance package tomorrow.
It’s kind of sad that 10 million dollars only earns you around $150,000 – $300,000 risk free every year in interest. But $200,000 – $250,000 a year so happens to be the ideal income for maximum happiness, so why not shoot for such a financial nut? Happy saving and investing everyone!
How would you spend $10 million? What is really the point of accumulating so much wealth beyond what you are comfortable spending? Would your way of spending $10 million differ if it took you ages to reach $10 million versus inheriting or winning $10 million? Do you think your life will change much with such a large windfall?
The IRS allows you to pass on $11.7 million when you die tax-free, and $23.7 million per couple as of 2021. If you’re able to accumulate such levels of wealth, you might as well figure out how to spend or give away every dollar above those thresholds.
What is a Reasonable Net Worth for You?
We believe the best piece of advice came from David Rockefeller, CEO at Chase Bank who said, “told us that it’s not about the money, it’s about the legacy you leave behind. Then he said, “Let’s face it, you will never see a hearse with a luggage rack.”
Schwab’s 2022 Modern Wealth Survey found that “more than eight in 10 Americans (82%) agree that their personal values play an important role in how they manage their finances.”
Almost eight in 10 Americans (79%) say they try to use their purchasing power to support brands that are aligned with their beliefs.”
Seventy-three percent agree that their values also guide their investment choices.
According to Schwab’s 2024 Modern Wealth Survey, Americans said that it takes an average net worth of $2.5 million to qualify a person as being wealthy, a bit of an uptick from $2.2 million in the surveys from 2022 and 2023. (Net worth is the sum of your assets minus your liabilities.)
* People with the top 1% of net worth in the U.S. in 2025 will have $11.6 million in net worth
* The top 2% will have a net worth of $2.7 million
* The top 5% will have $1.17 million
* The top 10% will have $970,900
* The top 50% will have $585,000
According to the most recent Federal Reserve Board Survey of Consumer Finances, which is released every three years and was last updated in October 2023, the median net worth of all families (meaning half made more and half made less) in 2022 was $192,900, and the mean, or average, net worth was $1,063,700.
Are you making $192,900 annually with an average net worth of $1,063,700?
Consider the average family’s net worth by age in 2024, according to the same survey:
* Younger than 35: $183,500
* 35-44: $549,600
* 45-54: $975,800
* 55-64: $1,566,900
* 65-74: $1,794,600
* 75 or older: $1,624,100
According to the previously mentioned 2024 Modern Wealth Survey by Schwab: The generations think to be considered rich you must have….
* Baby Boomers: $2.8 million
* Gen X: $2.7 million
* Millennials: $2.2 million
* Gen Z: $1.2 million
The generations also have different ideas about what average net worth it would take for them to feel “financially comfortable”…
* Baby Boomers: $780,000
* Gen X: $873,000
* Millennials: $725,000
* Gen Z: $406,000
* All Americans: $778,000
WHAT NET WORTH DO YOU WANT?
Inflation has been eroding the value of the dollar for years. Quite frankly, a million dollars is not THAT much money anymore.
If you want proof that a million dollars won’t go that far, let us show you what $1,000,000 can buy you today.
You can get an old, run down looking tiny house in San Diego for $1 million. You get “two” bedrooms with 840 square feet, and it looks like an old barn.
This isn’t just a San Diego thing. In San Francisco, a million home is simply the median home price.
You need to start thinking beyond a million dollars—more like $10 million.
If you need more convincing, let’s do the math and we’ll show you a million dollars isn’t even enough to comfortably retire on.
If you retire today at 65 with $1 million in cash (after taxes) and no new income from any source, you would have to live off of $40,000 a year ($3,250 per month) for the next 25 years before you ran out of money.
Consider that assisted living can cost up to $76,000 a year and those twenty-five years are cut to twelve, which means you are just about broke at 77.
And all this assumes no inflation or critical life events: lawsuit, divorce, college for the kids, or heaven forbid even more serious situations like cancer, a car accident, a family member in trouble, death of the breadwinner, economic downturn or loss of a job.
We know the idea that “a million dollars isn’t enough” may be hard for you to swallow, but your opinion doesn’t change the reality: A million dollars is simply not what it used to be. We know first hand how fast an emergency can devastate a household.
WE BELIEVE$10 MILLION SHOULD BE THE TARGET!
$1 million is fine if you have just one year left to live. If you have 30+ years left, you’ve got a problem because you’ll be worried about your little pile of depreciating paper running out so you’ll be forced to live frugally, pinching pennies.
To make your money last longer than your clock, you need much more than $1,000,000. You need more zeros than minutes. That’s the problem with money— time.
If you’re in poverty thirty years from now it won’t be because you’ve bought a latte every day, but because you didn’t think big enough and didn’t produce enough each day.
ACTION STEPS TO REACH A MILLION DOLLAR TARGET
Save to Invest,
Don’t Save to Save
Don’t be a Pretenders Spender!
Avoid Debt That Doesn’t Pay You
Work Harder but More Importantly Work Smarter
Invest in Yourself to Increase Your Income
What Will It Take to for You to Hit Your Target?
Remember $10 million is the new $1 Million.
So now that you know the numbers, what net worth are you shooting for? When do you want to have it? What will you do to get it?
If you really want a life or business that truly helps you and other people — even if you don’t know how to do it — contact us.
We work with people all over the world. We’ve helped thousands of people start and succeed balancing their life or business — even when they didn’t believe it. We can help you, too.
Contact, join us if you want to change your financial life. You’ll never be alone; we will guide and support you every step of the way.
Liberating the Financially Oppressed,
Reitenbach-Kissinger Institute
Sydney Reitenbach and Michael Kissinger
Text: 650-515-7545
Email: mjkkissinger@yahoo.com
By Michael Kissinger
Offers Results Only Coaching: Exceptional Profit Results-Proven Strategies and Universal Law Skills in Management, Marketing, Operations, Finance Every Business Owner Wants-Needs to Achieve Their Essential Transformation
Review: How to Make Your First $1 Million and More
13 ProvenStrategies to Reduce Your Tax Liability Effectively and Legally
Strategies for building wealth and avoiding excessive taxation from the most original finance thinkers of our time. This will teach you the Top 1 Ways to Avoid Taxes, what the Top 1% know about money and the tools they use to grow, protect and pass that wealth to their heirs tax-free.
Let’s face it: Taxes are a drag at any time in life. But in retirement, they can constitute a major strain on your limited financial resources. As such, it pays to find ways to lower your tax burden as a senior, and here are three ways to do it.
12 Ways You Can Keep Your Money— Tax-Free and Legally
1. Extra Standard Deduction for people over 65
When you turn 65, the IRS offers you a tax benefit in the form of an extra standard deduction for people age 65 and older.
For example, a single 64-year-old taxpayer can claim a standard deduction of $13,850 on their tax return. But a single 65-year-old taxpayer will get a $15,700 standard deduction for the tax year.
The extra $1,850 will make it more likely that you’ll take the standard deduction on your return rather than itemize. (The extra standard deduction amount is $1,850 for 2024).
If you’re married and one or both spouses are age 65 or older, you also get a bigger standard deduction than taxpayers under age 65 do. If only one spouse is 65 or older, the extra amount is $1,550 and $3,000 if both spouses are 65 or older.
2. IRA Contribution for a Spouse
Retiring doesn’t necessarily mean an end to the chance to put money into an IRA.
Generally, you must have earned income to contribute to an IRA. However, if you’re married and your spouse is still working, they can generally contribute up to $6,500 to a traditional or Roth IRA that you own.
The 2024 IRA contribution limit jumps to $7,000. If your spouse has enough earned income to fund the contribution to your account (and any deposits to his or her own), you are eligible for this tax benefit. There’s an important limitation to keep in mind, though.
3. Medicare Premiums Tax Deduction
If you become self-employed after you retiree (e.g., become a consultant) you can deduct the premiums you pay for Medicare Part B and Part D, plus the cost of supplemental Medicare (Medigap) policies or the cost of a Medicare Advantage plan.
4. Tax Credit for Low-Income Older Adults
To be eligible for the tax credit for low-income older adults, you must be a “qualified individual” and pass two income tests. Generally, you’re a qualified individual if at the end of the tax year you meet one of the following:
You were age 65 or older.
You were under age 65, you retired on permanent and total disability, and you received taxable disability income.
The first income test is based on your adjusted gross income (AGI).
If you file your tax return using the single, head-of-household, or qualifying widow(er) filing status, your AGI must be less than $17,500.
If you’re married and file a joint return, but only one spouse qualifies for the credit, your AGI can’t reach $20,000.
Married couples filing jointly must have an AGI below $25,000 if both spouses qualify.
Finally, your AGI must be lower than $12,500 if you’re married, filing a separate return, and lived apart from your spouse for the entire year.
The Second Income Test is based on the combined total of your non-taxable Social Security, pension, annuity, and disability income.
For single, head-of-household, and qualifying widow(er) taxpayers, the combined income must be less than $5,000.
The same income limit also applies to joint filers if only one spouse qualifies for the credit. If both spouses on a joint return qualify for the credit, the income limit is $7,500.
For married people filing a separate return who didn’t live with their spouse during the year, the limit is $3,750.
If, after all of that, you determine that you’re eligible for the credit, then you may be able to lower your tax bill. However, calculating the credit can be complicated. That’s why the IRS will calculate the credit amount for you. To take them up on the offer, follow the steps outlined in the instructions to Schedule R.
5. Timing Tax Payments
Although we think of Tax Day being on or around April 15, taxes are due as income is earned, and employers withhold taxes from our paychecks. When you retire, you break out of that system: it’s up to you to ensure the IRS gets its due on time. If you wait to send a check until the following year, i.e., when your tax return is due, you could be in for a surprise in the form of tax penalties and interest. So, you have two ways to pay your taxes on time:
* Withholding.
Withholding isn’t only for paychecks. If you receive regular payments from a 401(k) plan or company pension, the payers will withhold tax — unless you tell them not to.
The same goes for withdrawals from a traditional IRA. In retirement, it’s generally up to you whether part of the money will be proactively withdrawn for the IRS.
With 401(k)s, pensions, and traditional IRA withdrawals, taxes will be withheld unless you file a Form W-4P to block withholding. For periodic payments (i.e., payments made in installments at regular intervals over more than one year), withholding is calculated the same way as withholding from wages.
When it comes to traditional IRA distributions or other non-periodic payments, withholding will be at a flat 10% rate, unless you request a different rate or block withholding altogether.
However, non-IRA distributions that can be rolled over tax-free to an IRA or other eligible retirement plan are generally subject to mandatory 20% withholding.
Things are a little different with Social Security benefits. There won’t be any withholding unless you specifically ask for it by filing a Form W-4V. You can opt to withhold on Social Security at a 7%, 10%, 12%, or 22% withholding rate.
Withholding isn’t necessarily a bad thing, as it stretches your tax bill over the entire year. It might also make life easier if you would otherwise have to make quarterly estimated tax payments.
* Quarterly Estimated Tax Payments.
The alternative to withholding is to make quarterly estimated tax payments. You need to make estimated payments if you owe more than $1,000 in tax for the year above and beyond what’s covered by withholding. Otherwise, you could face a penalty for underpayment of taxes.
6. Avoid the Pension Payout Trap
There’s an exception to the general rule that it’s up to you whether taxes will be withheld from payments from pensions, annuities, IRAs, and other retirement plans.
If you get a lump-sum payment or other rollover distribution from a company plan, you could fall into a pension payout trap.
If you take a distribution from your pension, annuity, IRA, or other retirement plan, the company must withhold a flat 20% for the IRS. That’s true even if you plan to roll over the money into an IRA.
Even if you complete the rollover within the sixty days required by law, the IRS will still hold onto the 20% until you file a tax return for the year and request a refund.
What can make it more confusing is how can you roll over 100% of the lump sum if the IRS is holding onto 20% of it. Failure to come up with the extra money for the IRA would mean that amount would be considered a taxable distribution. That would, in turn, trigger an immediate tax bill and reduce the amount in your IRA.
Fortunately, there’s a way around that outcome.
Ask your employer to send the money directly to a rollover IRA. If the check is made out to your IRA, and not to you personally, there’s no withholding.
Even if you intend to spend some of the money right away, your best bet is still to ask your employer to make the direct IRA transfer. Then, when you withdraw funds from the IRA, it’s up to you whether there will be tax withholding.
7. The RMD Workaround
Required Minimum Distributions (RMDs) weren’t required a couple of years ago — but they’re back. Fortunately, though, retirees taking RMDs from their traditional IRAs may have an extra option for meeting the pay-as-you-go demand.
If you don’t need the RMD to live on during the year, you could wait until December to take the money.
Ask your IRA sponsor to hold back a large portion of the distribution for the IRS — enough to cover your estimated tax on both the RMD and your other taxable income.
Although estimated tax payments are considered to have been made when you send the checks, amounts withheld from IRA distributions are considered paid throughout the year, even if they’re made in a lump sum at year-end.
So, if your RMD is large enough to cover your tax bill, you can keep your cash in your IRA for most of the year, and still avoid the underpayment penalty.
9. Give Money to Charity
Once you reach age 70½, there’s a tax-friendly way to make charitable donations even if you don’t itemize. It’s called a qualified charitable distribution (or QCD for short).
With a QCD, you can transfer up to $100,000 each year from your traditional IRAs directly to charity.
If you’re married, your spouse can transfer an additional $100,000 to charity from their IRAs.
The transfer is excluded from taxable income, and it counts toward your required minimum distribution. That’s a win-win!
But if you do itemize your deductions, you cannot also claim the tax-free transfer as a charitable deduction on Schedule A.
10. Give Money to Your Family
Few Americans have to worry about the federal estate tax. That’s because the IRS lifetime gift tax exclusion allows you to pass up to $12.92 million to heirs for the tax year without being subject to estate tax. (Married couples can pass on double that amount.) The 2024 estate tax exemption jumps to $13.61 million.
But, if the estate tax might be in your future, be sure to take advantage of the annual gift tax exclusion. This rule lets you give up to a specified amount annually to any number of people without worrying about the gift tax ($17,000 in 2023, $18,000 in 2024).
This year, your spouse can also give $18,000 to the same person, making the tax-free gift $36,000.
For example, if you are married and have three married children and six grandchildren, you and your spouse can give up to $36,000 in 2024 this year to each of your kids, their spouses, and all the grandchildren without having to file a gift tax return.
11. Tax-Free Profit from a Vacation Home
To qualify for tax-free profit from the sale of a home, the home must be your principal residence and you must have owned and lived in it for at least two of the five years leading up to the sale. But there is a way to potentially capture tax-free profit from the sale of a former vacation home.
Let’s say you sell the family homestead and cash in on the tax break that makes up to $250,000 in profit tax-free ($500,000 if you’re married and file jointly).
You then move into a vacation home that you’ve owned for 25 years. As long as you make that house your principal residence for at least two years, part of the profit on the sale will be tax-free.
The $250,000/$500,00 exclusion doesn’t apply to any profit that is allocable to the time (after 2008) that a home is not used as your principal residence.
For example, assume you bought a vacation home in 2001, converted it to your principal residence in 2015, and sold it in 2022. The post-2008 vacation home use is seven of the twenty years that you owned the property.
So, thirty-five percent (8 ÷ 20) of the profit would be taxable at capital gains rates. The other sixty-five percent would qualify for the $250,000/$500,000 exclusion.
12. Living Off My Savings
The standard deduction was increased to $14,600 per individual and $29,200 per couple in 2024. In other words, any income you make up to these levels is tax free. If you are in the 10-12% TAX BRACKET you pay zero percent tax on long term capital gains and qualified dividends up to about $46,000.
13. Tax Saving from Small Business
There are many steps small businesses can take to minimize their income taxes, including making estimated tax payments, claiming deductions, and deducting mileage expenses. If you’re looking for ways to reduce your tax liability, follow our tax saving tips for small business owners below.
1. Keep Organized
2. Make Estimated Tax Payments
3. Claim the 199A Qualified Business Income Deduction
4. Pay Wages to Your Children
5. Claim the Self-employed Health Insurance Deduction
6. Contribute to a Retirement Plan
7. Invest in a Business Building
8. Deduct Fixed Assets Using Bonus Depreciation or Section 179
9. Screen Job Candidates for the Work Opportunity Tax Credit
10. Claim the Deduction on Home Office Expenses
11. Deduct Your Mileage Expenses
12. Convert Your Sole Proprietorship to an S-corp
13. Hire a CPA or an Enrolled Agent
Bottom Line
We hope that our tax tips have helped you. Good tax planning and saving on your taxes starts with being organized and having a solid bookkeeping system to produce accurate financial statements. That way, you aren’t depending on a box of receipts to determine your deductions.
Once you’re organized, hire a tax pro to help you sort through the myriad of tax deductions that might be available to your business. Finally, as your business grows and you hire employees, you should consider converting to an S-corp for considerable payroll tax savings.
CONCLUSION
Contact, join us and we’ll help you FREE to overcome the brutal truths about taxes.
We’ll help you with a FREE, Proven and Easy a Step-by-Step Formula and Process to to overcome the brutal truths about life, business and taxes and get you the real financial results you want. Can’t wait to hear what you accomplish this year!
Live Long and Prosperously,
Reitenbach-Kissinger Institute Sydney and Michael Text: 650-515-7545 Email: mjkkissinger@yahoo.com
Offers Results Only Coaching: Exceptional Profit Results-Proven Strategies and Universal Law Skills in Management, Marketing, Operations, Finance Every Business Owner Wants-Needs to Achieve Their Essential Transformation
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Here are the best investing strategies to increase returns, minimize risk and meet your goals. The strategy vary depending on your end investment goal and its timeframe, your risk tolerance and how involved you want to be in choosing your individual investments.
Learn this widely regarded, easy to implement investing approach. You will (likely) beat 60 percent to 70 percent of active mutual fund managers investing with this approach, and this Nobel Prize winning theory is easy to set up and manage.
This is not a get rich scheme, but a practical investing approach anyone can implement, follow and administer for the long haul.
Does this sound like you?
Are you worried about your financial future?
Would you like a method to set up your finances for success now, and financial security later?
Do you feel like you lack time and knowledge to properly manage your money?
Have you made money mistakes in the past?
If you answered yes to any of these questions, this investing blueprint offers a solution to your money planning concerns.
Practically, we understand that beating investment pros is great, but even more important than that is understanding how to invest to reach your personal investment goals.
Here’s how you’ll benefit and what you’ll learn from this investing blueprint:
These investing approaches helps you reach your financial goals.
Enough investing knowledge to create your own investment strategy and avoid making poor choices.
Explanations of common money terms, to increase your investing literacy.
The skill to determine whether you need an advisor, and what to look for if you want additional financial guidance.
An understanding of how you’ll respond to the ups and downs in the investing markets and, more importantly, how to invest so you’ll be comfortable and not racked with money worries during all economic scenarios.
How to narrow down the field of investments into a manageable number.
A clear picture of which investments to choose with sample portfolios to guide you.
How to integrate your workplace retirement account with your other financial accounts.
A plan to maintain your investment portfolio for the long term, in minimal time, so you’ll have the money you need for your financial goals, now and later.
With this information, you’ll have in hand a map for an investment approach that beats most professional active managers. But more importantly, you’ll learn to maximize your investment strategies and returns using research-based proven investing strategies.
What’s Your Investment Strategy?
The best strategies should help you meet your financial goals and grow your wealth while maintaining a level of risk that lets you sleep at night. The strategy you choose may influence everything from what types of assets you have to how you approach buying and selling those assets. This is where investment strategies come into play.
If you’re ready to start investing, a good rule of thumb is to ask yourself some basic questions:
* What are your goals?
* How much time until you retire?
* How comfortable are you with risk?
* Do you know how much you want to invest in stocks, bonds or an alternative?
Long-term investing is still the best way to beat the market, and these tips and strategies will help to put you on a path to financial success.
1. Active Investing
Active investors prefer trading more frequently and opportunistically to capitalize on market fluctuations. Stock traders may use technical analysis, the study of past market data such as trading volume or price trends, to help anticipate where market prices might go.
* Active trading includes different strategies based upon pricing, such as swing or spread trading, and can also include momentum and event-driven strategies.
* Momentum investing seeks to identify and follow trends currently in favor to profit off of market sentiment.
* Event-driven investing strategies attempt to capture pricing differences during corporate changes and events, such as during mergers and acquisitions, or a distressed company filing for bankruptcy.
2. Income Investing
Investment strategies can help investors achieve a particular aim; for instance, producing a steady income stream. Many investors use income investing to help cover their living expenses particularly when transitioning into retirement.
There are different investments that can produce income, from dividend-paying stocks to bond and CD ladders to real estate.
3. Value Investing
Made famous by investors such as Warren Buffett, value investing is the bargain shopping of investment strategies. By purchasing what they believe to be undervalued stocks with strong long-term prospects, value investors aim to reap the rewards when the companies achieve their true potential in the years ahead.
Value investing usually requires a pretty active hand, someone who is willing to watch the market and news for clues on which stocks are undervalued at any given time.
Think about it like this: A value investor might scoop up shares of a historically successful car company when its stock price drops following the release of an awful new model, so long as the investor feels the new model was a fluke and that the company will bounce back over time.
Grow your investment. Compare and contrast growth and value investing
Value investing is considered a contrarian strategy because investors are going against the grain or investing in stocks or sectors currently out of favor.
A subset of investors take value investing a step further by not just investing in cheaper stocks and sectors but purposely seeking out the cheapest ones out there to invest in so-called deep value
4. Growth Investing
Growth investing involves buying shares of emerging companies that appear poised to grow at an above-average pace in the future. Companies like this often offer a unique product or service that competitors can’t easily duplicate.
While growth stocks are far from a sure thing, their allure is that they might grow in value much faster than established stocks if the underlying business takes off. Growth investors are willing to pay a premium price for these stocks in exchange for their robust future growth potential. New technologies often fall into this category.
For example, if someone believes that home buyers are going to shift increasingly from banks to online mortgage lenders with a streamlined application process, they might invest in the lender they believe will become dominant in that market.
Investors can also look toward burgeoning geographies or companies to find growth. As they industrialize, emerging markets or developing economies usually are more volatile but also grow at a faster pace compared to their more-developed peers.
Companies are valued by market capitalization, or market cap, which is calculated by their total outstanding shares available times the market price of the shares.
Small-cap stocks, shares of companies usually valued at $2 billion in market cap or less, provide investors with greater potential risk but also greater potential return due to their faster growth trajectory.
5. Index Investing
While there are active and passive approaches to investing, there are also active and passive investments themselves when deciding between various types of funds.
Investors frequently use mutual funds, index funds and exchange-traded funds (ETFs) to populate their investment portfolio because funds provide access to a collection of securities, generally stocks and bonds, through one vehicle.
Funds allow investors to benefit from diversification, spreading investment risk across many securities to help balance volatility.
Active funds employ a portfolio or fund manager to handpick certain investments to populate the fund based upon proprietary research, analysis and forecasts.
The manager’s goal is to outperform the fund’s corresponding index or benchmark.
Passive funds, such as index funds and most ETFs, simply mimic an underlying index, providing the investor with similar performance to that particular index.
Some mutual funds have high expense ratios or high minimum investments (or both). But investors can often sidestep the highest of such costs by comparison shopping among mutual funds, or by favoring index funds and ETFs, which tend to offer lower expense ratios than actively managed funds.
Given the lower cost of passive funds and the arduous task of beating the benchmark facing portfolio managers, index or passive investing often delivers better overall returns over time.
6. Buy-And-Hold Investing
It’s always nice when things have a clear label, and you can’t get much clearer than “buy and hold.” Buy-and-hold strategists seek investments they believe will perform well over many years. The idea is to not get rattled when the market dips or drops in the short term, but to hold onto your investments and stay the course. Buy-and-hold works only if investors believe in their investment’s long-term potential through those short-term declines.
This strategy requires investors to carefully evaluate their investments — whether they are broad index funds or a rising young stock — for their long-term growth prospects upfront. But once this initial work is done, holding investments saves time you would have spent trading, and often beats the returns of more-active trading strategies.
7. Start with a new or existing retirement account
One way to begin investing is through a retirement account. Open or access an individual retirement account, or IRA, through a brokerage account. Then choose investments that are aligned with your goals.
If you already have a retirement account through your employer, it’s generally a good idea to contribute to that 401(k) first — and qualify for the company match — before you start funding your IRA. Employer match programs are free money you don’t want to leave on the table.
However, you should know that most 401(k)s offer relatively few investment choices, so the options for strategy within those vehicles are usually limited. Whereas IRAs give you access to a more expansive world of investments than your 401(k) may offer.
You can also trade through a brokerage account for long-term goals other than retirement.
8. Long-term investment strategies
Taking a buy-and-hold approach to investing is both the simplest and most dependable way to achieve substantial portfolio returns.
While most investors are best served by buying and holding stocks for the long term, the approach still leaves plenty of flexibility regarding which individual companies and investment themes to prioritize.
Here’s a breakdown of core long-term investing strategies you can implement.
9. Growth Investing
This approach focuses on companies that are expanding their businesses at fast rates and appear primed to continue generating impressive results.
Sometimes growth-oriented companies aren’t yet profitable or post small earnings, but the best companies display signs of substantial momentum and have high potential to increase their sales and earnings over time. Outsized growth can translate into big gains for a company’s share price.
10. Value Investing
This investing strategy centers on buying the stocks of companies that seem undervalued based on fundamentals such as revenue, profit margin, and competitive strength. Value-oriented strategies concentrate on buying stocks priced at low multiples of earnings or sales or those that pay attractive dividends. These tactics can reduce your investment risk while still creating opportunities for impressive portfolio gains.
11. Dividend investing
This investing approach prioritizes owning stocks that return value to shareholders in the form of regular cash dividends. A dividend-oriented strategy is often associated with value investing because it’s less common for growth stocks to pay dividends. But as a dividend investor, you can still choose to take a growth-focused approach by investing in companies that seem likely to continue increasing their dividends.
Dividend investing can be strongly oriented toward long-term investing by having all dividend payments automatically reinvested. Most brokerages can automate a dividend reinvestment plan (often abbreviated as DRIP), enabling you to harness the power of compounding. Using dividend payments to purchase more stock creates a virtuous cycle by increasing the number of shares in your portfolio that pay dividends. In turn, this increases the amount of dividends you receive. Over time, you can purchase more shares using only dividends.
Many investors opt for a mixed approach to portfolio construction, choosing to add a combination of growth, value, and dividend stocks. Each of these categories has something to offer a balanced portfolio.
12. Dollar-Cost Averaging
In addition to using growth, value, and dividend investing strategies for portfolio construction, investors can also take strategic approaches to how they buy stocks. A dollar-cost-averaging strategy involves making stock purchases at regular intervals over a long period of time instead of making large purchases all at once. As opposed to trying to precisely time the broader market or base purchases around specific stages or events in a company’s business cycle, dollar-cost averaging offers a way to minimize exposure to volatility and risk.
!3. Let Winners Keep Winning Investing
Knowing when to sell a stock is important even with a long-term approach to investing, but you shouldn’t be too eager to take profits on strong performers. Just because you’ve achieved strong returns with a stock over a five-year holding period doesn’t mean you should sell it. The next five years could be even better.
All companies will have their ups and downs, but strong businesses tend to keep winning over time, and competitive advantages and market opportunities can become even more pronounced and profitable if given time to flourish. Not every stock you buy will be a winner, but holding on to just a handful of strong performers will often more than make up for disappointments along the way. As famously successful investor Warren Buffett has said, “The weeds wither away in significance as the flowers bloom.”
14. Being a Foolish Investor
Market values always fluctuate and are essentially impossible to predict with certainty. As such, The Motley Fool’s investing philosophy eschews attempting to time the market and instead focuses on finding investments that can stand the test of time. Instead of trying to predict when the next crash or big bullish run is coming, investors are best advised to invest in companies with meaningful competitive advantages, strong management teams, and viable paths to long-term success.
Realistically assessing your risk tolerance is another Foolish component of long-term investing success. Some investment strategies may take longer than expected to generate profits — and not every stock you buy will be a winner. If you’re a younger investor, you might be comfortable investing in many relatively risky growth-oriented stocks. However, if you are retired or getting ready to retire, your risk tolerance is likely quite different.
If you depend on your investment portfolio to help support you in your nonworking years, then any sharp declines in your portfolio’s value are much more significant. Younger investors are more often growth investors, while older investors are more often value or dividend investors.
Portfolio diversification can be beneficial no matter how much money you’re investing, but it becomes increasingly important as you invest larger sums. Putting most or all of your money into a single stock can be catastrophic for your portfolio’s value if the stock’s price plummets. It could take years to recover the money you lose, or it may never be recovered. Spreading your investment dollars among many different assets in many different industries is key to reducing your investment risk.
Any company in which you invest should have a high-quality business and trade at a valuation that leaves room for long-term growth. If you understand a particular sector well and are knowledgeable about the current developments in the space, then it makes sense to invest more of your money in the sector. Investing in industries that you deeply understand makes you more likely to identify relevant developments ahead of most other investors.
13. Investment Strategies for Retirement
A patient, well-informed approach to investing can put you on the path to financial freedom and significantly improve your quality of life in retirement. Specialized retirement accounts are some of the most popular investment funds that can help you to achieve your financial goals.
Money that you contribute to tax-deferred retirement accounts, like most 401(k)s and individual retirement accounts (IRAs), reduces your taxable income for the year, although you must pay taxes on distributions received in retirement. Roth retirement accounts don’t confer immediate tax breaks but, instead, enable you to receive tax-free distributions in retirement.
Both types of retirement savings accounts have tax advantages. Tax-deferred accounts are best suited for people who expect to be in a lower tax bracket in retirement than they are today, while Roth accounts are preferable if you expect to be in a higher tax bracket when you retire.
Some employers offer contribution matching programs for 401(k)s and other retirement accounts. Taking full advantage of employer matching as early in your career as possible can significantly improve your investing performance over time and put you in a much better financial position in retirement. If you can afford to invest money to benefit from your employer’s retirement matching program, then your goal should be to maximize the matched contributions — e.g., the free money received from your employer.
Even if you follow all of the above advice, you always accept risk when you invest money in the stock market. But it’s worthwhile because not doing so actually guarantees that you lose money as inflation erodes the value of your cash. Don’t delay — make today the day you start increasing your wealth and building a path to long-term financial prosperity.
A. Long-term investment strategies simplify the stock market
There is an incredibly vast range of factors that can shape pricing trends for individual stocks and the broader market. In the short term, it’s possible that a company will deliver great business performance but still see its share price decline due to pressures shaping the stock market at large. However, if the company continues to serve up strong results, chances are good that its stock will eventually cut through market volatility and post strong returns. Long-term investment strategies help minimize the significance of the unknowable, and using these simplification tools can mean less stress and better performance for your portfolio.
14. Socially Responsible Investing
Social issues such as climate change and racial justice impact lives on a day-to-day basis. Socially responsible investing (SRI) aims to create positive change in society while also generating positive returns. In addition to investment performance, SRI investors look into a company’s business practices and revenue sources to ensure they’re aligned with their personal values.
Some investors employ SRI by excluding stocks of companies that go against their moral compass; for instance, they might exclude investments in “sin” stocks or tobacco- and alcohol-related companies. Others intentionally direct their investment dollars toward issues they care about, such as into renewable energy companies.
15. Principles of Investment Strategies
Whatever investment strategy you choose, it’s important to consider your investing goals. Where your investment style will fall in the following categories depends on many factors: Everything from your age to your finances and even your comfort level doing it yourself will help determine what your portfolio will look like.
Long-term goals vs. short-term goals
When investing for long-term goals — those five years or more in the future — it may make sense to choose higher-yielding (but more volatile) instruments like stocks and stock funds. But there are smart ways to pursue short-term savings goals, too. If you’re saving for a down payment on a house, you may want to place those savings in a more stable environment, like CDs or a high-yield savings account. Since you have a shorter time frame for your money to grow with a goal like this, there is less time to weather the volatility of the stock market.
Long-term savings goals, such as retirement, can handle the fluctuations of the market. Since those investments will be in the market for longer — provided the investor can stay the course when there are major changes in the short term — there is less need to worry about those shorter-term dips. These long-term investments are better served by a mix of stocks and bonds or stock mutual funds.
16. Popular Investment Actions:
* Don’t care about what is happening with markets today or tomorrow
* Don’t give a damn if your accounts are up or down in the short-term
* Buying and holding
* Adding money whenever you have it. So monthly or whatever is appropriate
* Being diversified but not overly so. Focusing on investing in 3–4 indexes.
* Have a small allocation to a bond index.
* If markets fall, rebalance from the bond index slightly. If they rise a lot, rebalance in the other direction
* Never dramatically changing the allocation just because markets are up or down
* Never take the news media seriously
* Never think this time is different
* Reinvesting dividends
* Not being taken in by stories about the next big thing
* The strategy should be about long-term success and not trying to see your account rising every month and year.
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