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• A cautionary tale: The importance of asset location

  Posted Jan 31 2008, 07:06 AM by Karen Datko
  Filed under: Investing, Retirement, Taxes, The Dough Roller

  This post comes from partner blog The Dough Roller.

  Asset location involves dividing investments between taxable and tax-deferred accounts in the most tax-efficient manner.

  As a general rule, mutual funds that generate a lot of dividends or capital gains should be placed in 401(k), IRA or other retirement accounts. Investments that do not generate a lot of dividends or capital gains can be placed in taxable accounts. Following this strategy, I've put all my bond funds, REIT funds and most of my small cap funds in retirement accounts.

  What happened to REIT mutual funds last year offers a hard lesson for some about why asset location is so important.   Read More...

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• Setting and achieving financial goals

  Posted Dec 31 2007, 04:21 AM by Karen Datko
  Filed under: Retirement, Taxes, Saving, Get Rich Slowly

  This post comes from J.D. Roth at partner blog Get Rich Slowly.

  For three years a single goal directed my actions: I wanted to get out of debt. Now that my consumer debt is gone, I've spent a lot of time wondering what to do next. I was worried that I'd lose focus, lose direction. That's not going to be the case. I've set three major financial goals for 2008. I intend to:

  • Max out my retirement plan for 2007 and 2008.

  • Pay taxes.

  • Bolster my savings.

  These goals are ambitious, but I think I can achieve them. In fact, I hope to do even more.

  Retirement. I got a late start on my retirement savings. My employer has been setting aside a pension for me, but I began my self-directed retirement savings only last year. I managed to make the full contribution to my 2006 Roth IRA. I've contributed $2,000 so far this year, and intend to max out my plan in the next couple weeks. For 2008, the contribution limit on Roth IRAs increases to $5,000 a year. I hope to invest this amount.   Read More...

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• 6 tax-efficient perks to ask for at work

  Posted Dec 27 2007, 08:27 AM by Karen Datko
  Filed under: College, Retirement, Insurance, Taxes
  Rating:

  This post comes from Nora Dunn at partner blog Wise Bread.

  The days of employer/employee loyalty are long gone. No longer do people finish school and work their entire career at the same company, retiring with full pension and benefits for life.

  In fact, the average person will change not only employers but also careers multiple times before reaching age 50. Combine that information with layoffs and downsizing on the employer side, and "tenure" is a thing of the past.

  As a competent and dedicated employee, you can use this to your advantage. If you are doing a good job, your employer will want to keep you. And to do so, your company knows it might need to entice you to stay if your skills are marketable and you are in demand.   Read More...

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• Consider an HSA during open-enrollment season

  Posted Nov 02 2007, 09:10 AM by Karen Datko
  Filed under: Investing, Retirement, Insurance, Taxes
  Many employers are holding open enrollment in health-insurance plans, so it's time to think about your options as the cost of insurance continues to rise . The Sun's Financial Diary , in two excellent and comprehensive posts, explores switching to a high-deductible plan partnered with a health savings account . If your employer doesn't yet offer this combination, and you're unhappy with the available plans, you can pursue it on your own . Sun notes that an HSA allows you to invest pretax money to build savings for future health care and, eventually, retirement spending, but you must be enrolled in a high-deductible plan to start one. (We'll add that for people who don't have health insurance , the lower premiums of a high-deductible plan might put the cost of health insurance within their reach.)
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