For the first time since 2008, contribution limits have risen for one of the most popular retirement savings vehicles available: the IRA. This means you’ve got a greater opportunity to put more money away for your “golden years.”
Effective earlier this year, you can now put in up to $5,500 (up from $5,000 in 2012) to a traditional or Roth IRA when you make your 2013 contribution. And if you’re 50 or older, you can put in an additional $1,000 above the new contribution limit.
Over time, the extra sums from the higher contribution limits can add up. Consider this example: If you put in $5,000 per year to an IRA for 30 years, and you earned a hypothetical 7% per year, you’d wind up with slightly over $505,000. But if you contributed $5,500 per year for those same 30 years, and earned that same 7% per year, you’d accumulate almost $556,000 — about $51,000 more than with the lower contribution limit.
It’s probably not on your calendar, but World Yoga Day takes place on Feb. 24. As more people have discovered its healthful benefits, yoga has grown in popularity. But whether or not you practice yoga, you can apply its lessons to other areas of your life — such as investing.
Specifically, consider the following yoga-related themes and how they might translate into investment habits that may be beneficial:
Love is in the air this week, as Valentine’s Day rolls around again. During the course of your life, you’ve probably sent your share of flowers and candy. But if your valentine is also your spouse — and, in particular, your long-time spouse — you may want to go beyond roses and chocolates this year to give a gift that can help lead to financial security.
You can choose to make financial gifts in a number of ways, of course, and some of them could provide an immediate financial impact. But you may want to look even further down the road and consider what you can do for your spouse in the areas of insurance planning and estate considerations.
In Europe, the financial crisis drags on. China’s economic growth has slowed from “wow” to “ho-hum.” Here at home, we’ve seen heated political debates over taxes, spending and deficit reduction. Taken together, these factors have created a “fog of uncertainty” that has left many investors in the dark about their next moves. But is this “fog” really impenetrable — or can you, as an individual investor, see through it to a place of clarity?
To do so, you first need to realize that while the events mentioned above are certainly not insignificant, they also aren’t the key determinants of investors’ success. While these types of stories dominate the headlines, they also tend to obscure some of the factors that frequently do play a bigger role in the investment world. And right now, these factors are actually somewhat encouraging.
Consider the following:
Groundhog Day is almost here. For most of its history — which, according to some reports, dates back to the first celebration in 1886 or 1887 in Punxsutawney, Pa. — Groundhog Day held little significance for most Americans.
But that changed in 1993 with the release of the movie Groundhog Day, in which a semi-embittered meteorologist, played by Bill Murray, is forced to re-live the same day over and over again. He repeatedly makes poor choices, until he finally learns from his mistakes and is granted the ability to move on with his life. Since the movie came out, the term “Groundhog Day” is often used to refer to a situation in which someone repeats the same mistakes. It’s a phenomenon that happens in many walks of life — including investing.
So, how can you avoid becoming a “Groundhog Day” investor? Here are some suggestions:
It’s not so easy being a college kid these days. The job market for recent graduates has been shaky while, at the same time, students are leaving school with more debt than ever before. If you have children who will someday be attending college, should you be worried?
You might indeed have cause for concern. Americans now owe more on student loans than on credit cards, according to the Federal Bank of New York, the U.S. Department of Education and other sources. For the college class of 2011, the most recent year for which figures are available, the average student loan debt was about $26,500, according to the Institute for College Access and Success’s Project on Student Debt.
Investors sometimes may get frustrated with their investments because those investments don’t seem to produce quick results. Perhaps that’s understandable in our fast-paced society, in which we’ve grown accustomed to instant gratification. But investing is, by nature, a long-term activity. If you look at it in terms of an athletic event, it’s not a sprint, in which you must pull out all the stops to quickly get where you’re going. Instead, it’s more like the 26.2-mile race known as a marathon.
And as an investor, you can learn a few things from marathoners, such as:
As an investor, how can you avoid making mistakes? It’s not always easy, because investing can be full of potential pitfalls. But if you know what the most common mistakes are at different stages of an investor’s life, you may have a better chance of avoiding these costly errors.
Let’s take a look at some investment mistakes you’ll want to avoid when you’re young, when you’re in mid-career, when you’re nearing retirement and when you’ve just retired.
These days, you can go online and invest, for modest fees. You can also visit various websites for research and watch numerous cable shows for investment recommendations. So, why shouldn’t you be a “do-it-yourself” investor rather than work with a financial professional?
Actually, there are at least five good reasons why a financial advisor can help make you a better investor.
A financial advisor can:
Once again, it’s time to make some New Year’s resolutions. This year, in addition to promising yourself that you’ll hit the gym more often, learn a new language or take up a musical instrument — all worthy goals, of course — why not set some financial resolutions?
Consider these suggestions: