For all of us, the feelings surrounding January are as varied as the people experiencing it. For some, it's a depressing feeling that the holidays are over: for some, it's a great joy the holidays are over. From a psychological standpoint, I find it forever wondrous trying to discover how the human mind works…with little success! That's what makes us all different, from the outside to the inside; from maudlin feelings to hilarity- we're all different in so many ways. So for some, January is the beginning of 2017, a fresh beginning on the New Year. From my standpoint however, the year 2016 doesn't end until 4/15/17 (yes, the dreaded tax season) so I'm not doing the Auld Lang Syne dance yet.
I've always tried to teach my clients that tax planning is not an end of the year thing when you go see your tax accountant once a year for the dreaded visit. No, it's really a 12 month a year, 365-day planning session…if your goal is wealth and financial security. I've written in the past about the habits of really successful people, and the things they do. Now, success and wealth mean different things to everybody, but the commonality I've found after dealing with thousands of people just like you, is financial security. The ability to go to sleep at night without waking up at 2 AM in a sweat about a bill that has to be paid, the roof that still needs replacing, or the car payment that's almost past the 10-day late date. It's hard enough getting through the night uninterrupted (c'mon, you know what I mean) let along going back to bed with a clear head and falling back into a blissful sleep. No my friends, it's not easy and you're not alone- the ghostly ghoulies attack almost everybody. Yes, almost... those who take their financial planning with a sincere outlook are the ones who sleep the best. In our firm, we have a motto: we like to work with people "who are serious about their money." If you're not serious about your financial outlook, who will be?
From January 1st until April 15th, you have the unique advantage to make up for the lack of attention you had paid to your financial future during the 12 months of 2016. You can make retirement contributions for 2016 right up until (not after) you file your taxes for 2016- a reason to file late, not an excuse. The bonus- if you're over the age of 50 (who isn't?) you get to put away even more away. For those of you readers who are NOT below the age of 50, you have the advantage of time- more years for your investments to grow. Either way, we all get the April 15th advantage- if we're smart, diligent, have a great advisor (AHEM...) and a desire to spend the golden years of our life swathed in luxury and wealth. * I never understood why they call it the “golden” years- for me and all my male friends it seems to be the grey and white years. Have I told you how much I love my Elizabeth lately, the “golden” blond goddess? Get it? Good! Anyway, let's get back on track- the next 3 ½ months to catch up for lost time. Focus people... FOCUS!!!
The first and most lucrative way to save is if you work for a company that has a 401(k) that matches your contribution- that's free money! At the very least, be sure to fund your 401(k) at least to the maximum that your employer will match it, usually dollar for dollar. That's an immediate 100% return on your money (depending on the vesting schedule). No matter what, be sure to take your employer up on their kindness to give you free money- they don't have to, and they do it to show their appreciation for you. Say thank you and take it- you earned it. It's great to see your account balance go up without putting your hand in your pocket... and don't forget to thank your employer. As an employer, it means a lot to us to be recognized as much as you like to feel appreciated. It's just human kindness at its best, from both sides.
Let's talk IRA's. The two most commonly used are the Traditional and the Roth. With the Traditional, the contribution is a before tax contribution and the Roth is an after tax contributions. The space allotted to me by Phil doesn't allow me to give you a full description, but I implore you to visit your Certified Financial Planner™ to discuss the differences, ramifications, qualifications and exclusions as to the right retirement vehicle for you. On our website (www.chestnutinvestment.com) you can read articles I've written that go deeply into this issue.
It's all about planning- and January can be the start or the end. As Bogey said to Sam- "This can be the start of a beautiful thing..."