If your company has a 401(k) that has a company match of a certain percentage of what the employee puts into it, the easy road is to contribute enough to get the company match, then stop. See this article in MarketWatch by Richard Mason to see why this road can be a mistake in the long term: www.marketwatch.com/story/how-to-stretch-the-401k-match-2015-06-24 An important item for retirement is to save at least 10% of your income in some retirement vehicle. A good rule of thumb is to put enough into the 401(k) to get the company match, then contribute to a Roth IRA if you qualify because of income, and then contribute the rest of the 10% into the 401(k). Also I would not include the match as part of the 10% (the 10% should be money you contribute, the match I would treat as earnings.) With compounding, you will be amazed at how much money you will have at retirement. For financial, accounting and tax musings, You can count on us to count for you! Email: bstonercpa@sbcglobal.net Phone: 818-317-6035 Website: www.briantstonercpa.com Android and the IPhone: Has been Featured On https://twitter.com/bstonercpa
Tax Musings of a Burbank CPA: Tax Tips for Students with Summer Jobs
So, if your teen is getting a job over the summer (to pay for their video games and Nikes), remind them of withholding payroll taxes and other items related to them. The IRS has a tip for students with summer jobs; see the link below: http://content.govdelivery.com/accounts/USIRS/bulletins/10a442d?reqfrom=share An important thing for them to remember is that if they are your dependents they can earn $6,200 without paying any income tax, and if they can take their own dependency exemption they can earn over $10,000 without income taxes, so have them adjust their income tax withholding accordingly (social security, medicare tax and many local and state taxes will still be withheld, explaining why their check is so much smaller than what they thought they were going to get.) It might be a good idea to have them set up a Roth IRA with some of the money, which will get them started on their retirement savings (just a thought!) For financial, accounting and tax musings, You can count on us to count for you! Email: bstonercpa@sbcglobal.net Phone: 818-317-6035 Website: www.briantstonercpa.com Android and the IPhone: Has been Featured On https://twitter.com/bstonercpa
Financial Musings of a Burbank CPA: Letting your investment winners run and protecting your downside Part 5 of 5
This article concludes my five part newsletter series I published about a year ago on investments – Letting Your Winners Run and Protecting Your Downside. Part 5 0f 5 – How It All Works Together: Okay, now how does this all work together? First, select the investments you want, making sure you diversify between assets and across industries. Now pick somewhere between 20 and 25 investments and put equal amounts in all of them (keeping position sizes between 4 and 5 percent of assets.) Keep track of your stop losses – about 15% to 25% of the investment. The worst case situation – an investment drops below your stop loss. If you follow your stop and sell at the open the next day, with the position size of 4-5% your worst loss will be around 1 to 1 1/2% percent of your assets. A few of these will probably hurt a little, but you have small losses to deal with rather than big ones. If a couple of investments take off, you can let your winners run, using the stops to stay in the investment and then tighten your stop loss and when you sell you will protect most of your profits. [...]