Category: Financial Focus

New at Investing? Follow These Suggestions

By Edward Jones Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C. If you’re fairly new to investing, you might be wondering what sort of rules you should follow or moves you should make. And while everyone’s situation is different, there are indeed guidelines that make sense for all investors. Here are some to consider: Learn the basics. The investment world can seem confusing, but the more you know about the basic components, the more confident you’ll be when you begin to invest. For starters, you’ll want to be familiar with the essential types of investments: stocks, bonds, mutual funds, government securities and so And it’s also important to know that some investments are designed to provide growth – an increase in the investment’s value – while others provide income in the form of dividends or interest payments, and still others may offer growth and income. Set your goals. You need to know why you’re investing – and that means you must clearly define your goals. Do you want to retire early? When you do retire, what kind of lifestyle would you like to have? Are you...

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Millennials May Need to Boost Life Insurance

If you’re a Millennial –born between 1981 and 1996 – you’re either in the very early or relatively early stages of your career, and as the old song goes, you’ve got a lot of living to do. Still, it’s not too soon to think about a financial issue you may have overlooked: the need for life insurance. Regarding this topic, Millennials need to ask three key questions: When should I purchase insurance?The answer to this question depends somewhat on your stage of Millennial-ism. If you’re a young Millennial, perhaps just out of college, single, and living in an apartment, your need for life insurance may not be that great. After all, you may well have other, more pressing financial needs, such as paying off your student loans. But if you’re an older Millennial, and you’ve got a mortgage, a spouse and – especially – children, then you unquestionably need insurance, because you’ve got a lot to protect. How much do I need? Millennials who own life insurance have, on average, $100,000 in coverage, according to New York Life’s 2018 Life Insurance Gap Survey. But that same survey found that Millennials themselves reported they need coverage worth about $450,000, leaving an insurance deficit of approximately $350,000. That’s a pretty big gap, but of course, these figures are averages and may not apply to your situation. Still, you should know how...

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Take Greater Control of Your 401(k)

By Edward Jones Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C. If your employer offers a 401(k) or similar plan, you’ve got a powerful retirement- savings tool at your disposal. And yet, how well you do with your 401(k) depends greatly on your choices and actions. What steps can you take to maximize the benefits of your plan? For starters, be aware that your 401(k) may come with what might be called “standard” features, which you should review to determine their applicability to your situation. These features include the following: • Default deferral rate – When you take a job, your employer may automatically enroll you in the company’s 401(k) plan and assign a “default” contribution rate – the percentage of your salary you will put in to your 401(k). Many companies choose a default rate of 3 percent, although, in recent years, there has been a move toward higher rates, even up to 6 percent. Unfortunately, too many people don’t question their default rate, which could be a problem, especially if it’s at the lower end. If you want your 401(k) to ultimately provide you...

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How to Become a Long-term Investor

It’s a fairly predictable pattern: When the stock market rises, more people invest, but after a large-scale drop, many of these same people head for the exits. But by staying out of the financial markets, and only putting their money in “safe” vehicles that offer few or no growth prospects, are they really helping themselves? Here’s the bottom line: If you’re going to make progress toward your long-term goals, you have to become a long-term investor. But how? To begin with, you need to understand that long-term investing involves accepting inevitable short-term price swings. You may not like seeing those sharp price drops, but it will help your outlook greatly if you can keep them in perspective. Studies have shown that the longer you hold your investments, the less impact market volatility can have on them. So, to reach that point where the market’s ups and downs have less of a cumulative impact on your holdings, consider the following actions: Only invest money you won’t need for a long time. If you can tell yourself that the money you are investing today is money you won’t really need for 20 or 30 years, you’ll be better prepared, psychologically, to get through the down periods of the financial markets. And as long as you aren’t overextending yourself financially in other parts of your life, you really shouldn’t need those investment...

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Don’t Change 401(k) Mix During Market Drops

By Edward Jones Edward Jones is a l icensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C. As you’re well aware, we’ve seen some sudden and sizable drops in the financial markets in 2019. While market volatility is nothing new, the recent plunges happened during a period of general political and economic unease. Still, it can be harmful to overreact to such events – especially if it means making radical changes to your 401(k). And yet, many people do just that. During market downturns, investors often move money from their 401(k)’s stock accounts into perceived safer accounts, such as those primarily containing bonds or other fixed-income securities. This move may result in reduced volatility on your 401(k) statements, and if that’s all you want, you might be satisfied. But you do need to realize the cost involved – specifically, fixed-income investments will not provide the same rate of return that equities (stocks) can. So, if you liquidate some of your equity holdings, you may slow the growth potential of your 401(k), which, in turn, could slow your progress toward your long-term financial goals. Furthermore, if you get rid of substantial amounts...

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Be Creative When Withdrawing from Retirement Accounts

By Edward Jones Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts L.L.C. Like many people, you may spend decades putting money into your IRA and your 401(k) or similar employer-sponsored retirement plan. But eventually you will want to take this money out – if you must start withdrawing some of it. How can you make the best use of these funds? To begin with, here’s some background: When you turn 70 ½, you need to start withdrawals – called required minimum distributions, or RMDs from your traditional IRA and your 401(k) or similar employer-sponsored retirement plan, such as a 457(b) or 403(b). (A Roth IRA is not subject to these rules; you can essentially keep your account intact for as long as you like.) You can take more than the RMD, but if you don’t take at least the minimum (which is based on your account balance and your life expectancy), you’ll generally be taxed at 50% of the amount you should have taken – so don’t forget these withdrawals. Here, then, is the question: What should you do with the RMDs? If you need the entire...

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Consider Financial Gifts for Your Grandchildren

By Edward Jones Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C. National Grandparents Day is observed on Sept. 9. If you’re a grandparent, you may get some gifts or cards – or maybe even a phone call! But you might feel that it’s better to give than to receive, especially when it comes to your grandchildren. And you can make a real difference in their lives by making a financial gift for their future. For starters, think about your grandchildren’s education. If college or some type of vocational school is in their future, you may want to help them meet some of the costs, which can be considerable. One common education-savings vehicle is a 529 savings plan. With this plan, earnings on withdrawals are tax free, provided they are used for qualified education expenses. (Keep in mind that 529 savings plan distributions not used for qualified expenses may be subject to ordinary income tax and a 10% IRS penalty on the earnings.) You also may be eligible for a state income tax incentive for contributing to a 529 savings plan. Check with your tax advisor about...

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Work Toward Your Own Financial Independence Day

Once again, it’s time for fireworks, picnics and parades as the nation celebrates Independence Day. Collectively, we enjoy many liberties, but some freedoms can be elusive – and financial freedom is one of them. What actions can you take to help yourself eventually declare your own financial independence? For starters, you’ll want to determine what financial independence means to you. Is it the liberty to meet all your cash flow needs? The freedom to retire comfortably, at the age you choose? The ability to set up the kind of legacy you’d like to leave? If any or all of these things are important to you, consider the following suggestions: • Liberate yourself from oppressive debts. The cost of living is certainly not cheap, so it’s hardly surprising that so many people incur significant debt. Yet, the higher your debt load, the less you’ll have available to invest for the future. Debt might be one of the biggest barriers you face on the road to your financial independence. To avoid piling on too much debt, live within your means. Take steps such as saving for a vacation, rather than putting it all on your credit card, and getting just one more year out of that old car. Look for bargains everywhere – and find out what you can live without. And if you have sizable debts, see if you can...

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Life Events Can Lead You to See a Financial Advisor

Over the years, you’ll experience many personal and professional milestones. Each of these can be satisfying, but they may also bring challenges – especially financial ones. That’s why you may want to seek the guidance of a financial professional. Here are some of the key life events you may encounter, along with the help of a financial advisor can provide: • New job – When you start a new job, especially if it’s your first “career-type” one, you may find that you have several questions about planning for your financial future, including your retirement. You may have questions about how much you should contribute to your employer-sponsored retirement plan. What investments should you choose? When should you increase your contributions or adjust your investment mix? A financial advisor can recommend an investment strategy that’s appropriate for your goals, risk tolerance and time horizon. • Marriage – Newlyweds often discover they bring different financial habits to a marriage. For example, one spouse may be more of a saver, while the other is more prone to spending. And this holds true for investment styles – one spouse might be more risk-averse, while the other is more aggressive. A financial advisor can help recommend ways for you and your spouse to find some common ground in your saving and investment strategies, enabling you to move forward toward your mutual goals. • New...

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Tools are Great for Father’s Day and for Investors

If you’re a dad, you may well be pleased to unwrap some tools as Father’s Day gifts. Of course, it might be a stereotype that all men are handy at repairs; women certainly can be every bit as good when it comes to building and fixing things. In fact, the construction process is valuable for anyone to learn – and the same skills that go in to creating and mending physical objects also can be applied to financial projects – such as working toward a comfortable retirement. Here are a few of those skills: • Diagnosing the challenge – A good craftsperson knows that the first step toward accomplishing any outcome is to assess the challenge. So, for example, if you want to build some bookshelves right into the wall, you’ll need to locate the wall studs, determine if you have adequate space for the shelving you want and allow room for future expansion. Similarly, if you want to retire at a certain age, you need to consider the key variables: your current and future income (How much can you count on from your retirement plans?), where you’ll live (Will you downsize or relocate? Will you rent or own a house or condominium?) And what you’ll do as a retiree (Will you travel extensively or stick close to home? Will you do some type of work for pay or...

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Why Should Recent Graduates Care About Retirement Planning?

If you’ve graduated from college in the past year or so and started your first job, you’re no doubt learning a lot about establishing yourself as an adult and being responsible for your own finances. So thoughts of your retirement are probably far away. And yet you have several good reasons to invest in your 401(k) or similar employer-sponsored retirement plan. First of all, by contributing to your 401(k), you can get into the habit of regular investing. And since you invest in your 401(k) through regular payroll deductions, it’s an easy way to invest. Furthermore, your 401(k) or similar plan is an excellent retirement-savings vehicle. You generally contribute pre-tax dollars to your 401(k), so the more you put in, the lower your taxable income. Plus, your earnings can grow on a tax-deferred basis. Your employer might also offer a Roth 401(k), which is funded with after-tax dollars; although you can’t deduct your contributions, your earnings can grow tax-free, provided you meet certain conditions. And with either a traditional or Roth 401(k), you generally have a wide array of investment options. But perhaps the main reason to start investing right away in your 401(k) is that, at this point of your life, you have access to the greatest and most irreplaceable asset of all – time. The more time you have on your side, the greater the growth potential...

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Are Women Better Investors Than Men?

Most of us would probably agree that men and women frequently behave differently, and these differences often show up in professional, family and social situations. Of course, this certainly doesn’t mean either gender has an advantage in these areas. However, here’s an interesting question: Do women possess attributes that may make them better investors? Some evidence suggests this may indeed be the case. Consider the following: • Long-term focus – Women seem to focus more on long-term goals, according to some studies, whereas men may concentrate more on short-term track records of potential investments. Generally speaking, taking a long-term approach to investing is a good strategy because it can help you maintain discipline and avoid subjecting yourself to the dangers of overreacting to market swings. One such danger is selling an investment whose price may have dropped but may still have strong fundamentals and good prospects. • Less frequent trading – A well-known study from the University of California found that men traded investments 45% more frequently than women. Other, more recent studies have produced somewhat different results, but the overall picture does seem to show that women do significantly less buying and selling than men. This tendency is important because frequent trading can undercut a long-term, cohesive investment strategy. If you’re constantly buying and selling, you won’t give some investments a chance to achieve their full growth potential,...

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