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.

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:

“People all think savings and investing are the same thing. They are totally different. – Eric Peterson

More From Eric:

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

Subscribe To The Podcast:

Apple Podcasts  -  Google Podcasts  -  Spotify  -  Stitcher  -  iHeartRadio  -  TuneIn

Check out some other recent episodes

Mailbag: Should I Fire My Broker?

April 18, 2024

Navigating life’s financial crossroads can be tricky, especially when it involves your financial future. In this episode of Retirement Ready, Eric addresses these complex issues head-on. How do you best evaluate your broker and your investment performance against the S&P 500? Eric says a lot of that comes down to setting expectations and understanding the risks. Then, Holly wants to know what to consider before making a midlife career change.

Read More

Putting It Off

April 11, 2024

We are all guilty of procrastinating from time to time. Financially speaking, though, this can get you into a lot of trouble. Let’s talk about the areas where it might feel better to kick the can down the road.

Read More

Common Scams to Avoid

April 4, 2024

Americans over 60 have lost more than $3.1 billion in various forms of fraud and scams in the last 12 months! Today we talk through some of the common scams people unfortunately fall for and how you can stay vigilant against it.

Read More

Financial Strategies: Agree or Disagree?

March 28, 2024

There are a number of financial ideas that people have differing opinions on. Eric shares today which of these he agrees with or disagrees and why.

Read More

Divorce Mistakes

March 21, 2024

Unfortunately, divorce happens. When it does, no one wants to make costly financial mistakes amidst an already stressful time. Today, we talk about the mistakes that can happen and how to avoid them when it comes to dividing up your assets with a spouse.

Read More

Villains of the Financial World

March 14, 2024

Just like some of these cinematic villains, some of these financial elements may have a bit of nuance and history that can make it hard to label them all good or all bad.

Read More

Uses for Life Insurance

March 7, 2024

When you’re younger, life insurance is often thought of as an income replacement as needed. But as you get older and into retirement, you might find other uses for life insurance. When thinking ahead for your estate and how it passes to beneficiaries, life insurance can prove to be a useful tool. Currently, the proceeds from life insurance are tax-free. How does that change how you include it in your financial plan? Eric outlines some of the options and benefits life insurance can provide.

Read More

Understanding Financial Risk

February 29, 2024

What kind of risks do you take in your financial life? As you get less comfortable with things like climbing up ladders and riding on skateboards, you might also become less financially risky. When you enter retirement, how you view your money in the market changes significantly from your working years. It’s important to look at your portfolio to ensure your investments match your risk tolerance.

Read More

Mailbag: What Financial Advice Should I Share with My Grandchild?

February 22, 2024

Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?

Read More

The Good Old Days

February 15, 2024

Why is retirement planning different than the “good old days” that our parents and grandparents experienced? Things like pensions, Social Security, and even RMD age have changed. Is your financial plan set up accordingly or is it in need of some changes to match?

Read More

Leave a Comment