Episode #3: Mailbag – Weddings, Capturing Gains, Underperforming IRAs

Today’s Prep:

We’ll take your questions on saving for weddings, capturing gains versus saving in taxes, and underperforming IRAs.

(Click the featured times below to jump forward in the episode)

First Things First.

  • [00:44] – In The News: Unemployment Rates Falling For Uneducated Workers

Equipping Points:

[5:31] – Mailbag: Jerry Asks How To Invest For His Daughters’ Weddings. 

  • This is an interesting question in that Jerry indicates he’d like to invest for his two daughters’ future weddings. However, we really think you should be saving instead. Your savings are comprised of money that will be needed at a particular time. Therefore, you’ll want to be sure your money is still there. Savings can be used for things like a new car, a downpayment on a house, or a college education. Those dollars should most likely be kept in a savings or money market account somewhere. Investing on the other hand involves risk. Think about what would happen if you invested the money for your daughters’ weddings, the market subsequently tanked, and you were left with nothing to pay for them. You’d most likely be pretty upset, and your two wedding-less brides would certainly be less than enthused. Save for timely expenses; invest for the long-term.

[7:51] – Mailbag: Kate Wants To Know Whether To Prioritize Gains Or Low Taxes. 

  • Kate wants to sell her stock in Apple. She wants to capture the gains she’s made through the years, but she’s worried about the tax bill she’ll incur. This is a bit of a Catch-22. Yes, you’ve made gains if you’ve held onto Apple through the years, and yes, you’ll have to pay the taxes on those gains. However, the alternative is to wait until the stock drops, and while you’d pay less in taxes, you’d also see less of a return on your investment. Therefore, we’d recommend Kate go ahead and take her gains. It might be smart for her to work with a tax professional and take her gains in chunks. Doing so might help to alleviate her tax burden.

[10:17] – Mailbag: Alec Asks Why His IRA Is Underperforming.

  • This is a tough one to answer. It really depends on what your IRA is invested in. If you’re IRA is invested in a CD at the bank, then you should expect to see a low yielding investment. Furthermore, if your advisor has put you in a conservative account, you could also be seeing lower returns. Because of our current interest rate environment, conservative accounts have been struggling the last couple of years. Compared to the market, their growth has been practically stagnant. It really just depends on how your money is invested.

Today’s Takeaway:

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The host: Eric Peterson - Contact - Call: (515) 226-1500

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