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Take Steps to get the Most out of your 401(k)

Written by Tim Decker, AIF®. Posted in The Patriot News

Steps to successQ: Can you offer advice on things people should know about 401(k) plans?

A : Sure. How much money you have in your 401(k) account when you retire depends in part on how you handle it (the choices you make), having a solid plan for managing it and the degree of discipline you bring to this challenge.

These plans are how most Americans save for retirement. They enable people to invest pre-tax dollars, and these contributions can take the sting out of saving money by lowering your tax bill in the years that you earn them. For many people, this is highly advantageous because they're in a lower tax bracket after retiring than during their working years. For those contributing to a Roth 401(k) account (offered by some employers), withdrawals at retirement can be tax-free, but taxes must be paid on this income in the years that you earn it.

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Four Points to Keep in Mind in a Down Stock Market

Written by Tim Decker, AIF®. Posted in Central Penn Business Journal

mountainAfter more or less a flat year in 2015, the broad U.S. stock market is down, as of mid-March in 2016. But that's no reason to throw up your hands in despair. Instead, this is a time to remember that disciplined investing is what matters most.

It's easy to stay invested when the market's going great guns. What takes discipline is staying the course when things get rough—instead of making rash moves that may actually cut into your long-term investment returns.

Here are some tips to help you weather the storm:

  1. Stick to your plan. If you don't have a financial plan, develop a sound one that protects you against unnecessary risk, the bogeyman of long-term average returns. However, if you have a solid plan, remain committed to it. Don't let a down market change what you're doing. A sound plan can help protect you against the risk of substantial loss in a down market by expecting these inevitable downturns and spreading your portfolio over different types of assets to avoid too much damage in any one of them. If the current market tempts you to invest in ways that are at odds with this plan, you will be thwarting the intent of the plan you set up. A good way to bolster your discipline to stick to your plan is to keep in mind the investing goals you used in setting it up and think about how acting rashly could throw a monkey wrench into your odds of success in the long term.
  2. Depending on your personal situation, tax bracket and expectations of future use of taxable investments, consider taking what the IRS gives you by realizing losses when selling certain investments. By doing this, you can help offset taxable gains on other investments, and thus defer taxes into the future. If you have taxable investments that you anticipate passing on to your heirs, this is a strategy that may be worth considering.
  3. Rebalance your portfolio. When you set up a portfolio, you want exposure to different asset classes in different amounts in keeping with your goals, risk tolerance and time horizon. Over time, these proportions drift outside their target ranges as some asset classes increase in value and others decrease. If you started out with 60 percent of the dollar value of your stock portfolio in large companies and 40 percent in small ones, in a year or two you could find those percentages reversed if large companies do poorly and small companies do better than large ones during that period. So the idea is to rebalance your portfolio to restore it to the original 60-40 allocation of large company stocks to small. You want to consider doing this no matter how well or poorly the market is performing. The whole idea of a balanced portfolio is to reduce risk. To stay in balance, you have to rebalance.
  4. Spend wisely. The wisest spending move is not to spend too much. Sure, you want to spend money on experiences that make you happy, but be wise when spending. For retirees living off investments, this is all the more important in a down market, when returns are lower. Do you really need that new car you're thinking about buying or could that wait another year or two? Is it really important that you remodel your kitchen this year instead of waiting? These are the kinds of decisions that can make a huge difference in your spending and, when you invest this money wisely, significantly increase the likelihood that you won't outlive your money.

By keeping these important points in mind and acting accordingly, you can make it through inevitable, temporary declines without damaging your portfolio. And, unlike the day-to-day movements of the markets, these all are actions you can control.


 

This content is based upon information believed to be accurate by ISI Financial Group, Inc. However, it should not be relied upon for legal or accounting purposes. You should always use the custodian's brokerage statements as an accurate reflection of your portfolio. Past performance is not indicative of future performance. Investments involve risk, including the possible loss of principal. Always seek professional advice before making any financial or legal decisions.

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Avoid These Mistakes When Seeking a Mortgage

Written by Tim Decker, AIF®. Posted in The Patriot News

Business of Home BuyingQ: We want to buy a bigger home and are bewildered by the mortgage process. How can we make this easier?

A: That's a question that many people need answers to these days as they begin to house hunt. Stung by the mortgage crisis that ushered in the Great Recession of 2008-09, many would-be buyers have been hunkering down in their homes, putting off plans of buying a new home until the storm passes.

Now that the economy has improved somewhat and people are a bit more secure in their jobs, more are looking to buy homes before mortgage interest rates rise further after inching upward a little in recent months.
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Remain Calm When Riding Out the Market Storm

Written by Tim Decker, AIF®. Posted in Central Penn Business Journal

Storm-Dog

Last fall, the stock market was highly volatile, with share prices shooting up and down. This year, this volatility turned into consistent loss, and the market was down substantially as of mid-February: Indeed, the Dow Jones Industrial Average was down nearly 13 percent from its record in May of last year.

Some pundits see this as a prelude to a bear market (defined as a 20 percent drop) while others say the overall decline will go no further than a correction (defined as a decline of at least 10 percent). As of Feb. 10, the S&P 500 was down for the year by 9 percent.

On the Air

newsradio-WHP-webTim Decker hosts the weekly radio show “Financial Freedom” on WHP 580 AM Harrisburg every Saturday at 10:00 am Eastern.

He brings his extensive knowledge and over 28 years of experience to the discussion of current financial and wealth management topics. Each show also includes a Q&A session when Tim provides straightforward, unbiased answers to questions from callers. This is the program that represents your best interests, not Wall Street's.

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The Sleep-Well-at-Night Investor

The-Sleep-Well-At-Night-Investor

ISI Financial Group helps clients take all necessary steps to properly develop and implement a holistic financial plan using evidence-based, time-tested strategies centered around financial science. In his book, “The Sleep-Well-At-Night Investor,” Tim Decker shows readers how misinformation from the mutual fund industry has created widespread harm amongst investors. The book also discusses the temptation to think of investing like gambling, and the tragedy of gambling away savings and security under the guise of investing.

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