Making the most of your investments

If you’re like most people, during your working years you invested for your future retirement through some type of retirement plan, usually a 401k, 403b, IRA or something similar. In most of these plans, you had a “menu” of investment choices which probably consisted of a variety of mutual funds or other interest bearing funds.

James Byrd with Safe Harbor Financial says the most critical years to plan for your retirement are the 5 years before and the 5 years after your retirement date. This is because a loss in principle during this 10 year period may not be recovered from when you start taking income. This is why traditional market based investments leave retirees exposed to unnecessary risk when it matters the most.

There are times when it may be beneficial to make use of other investment instruments to maximize your gains. Once you realize that a market decline during this critical period can hinder your retirement lifestyle, you should be looking for safer investment tools to mitigate this risk. There are alternatives out there and they should be explored. Unfortunately most people that realize this risk and don’t know what options are available end up pulling their money out of any investment and putting it on the sideline in CD’s or other negative real return vehicle.

During the financial crisis in 2008/2009 many retirees took advantage of products offered by some of the top insurance companies. These individuals made an overall positive return on their portfolios when others lost a significant amount to their investments.

If you’ve taken a loan from your 401k and you are are fired or you leave your job, the loan immediately becomes due. If you fail to pay it back, the outstanding loan balance is treated like an early withdrawal by the IRS and as such is subject to a 10% penalty plus all of the taxes due.

Early withdrawals are treated as income for the tax year in which you received it. These loans have been described as “tax-disadvantaged”, on the theory that the 401(k) contains before-tax dollars, but the loan is repaid with after-tax dollars.

Virtually all employers impose severe restrictions on withdrawals of pre-tax or Roth contributions while a person remains in service with the company and is under the age of 59½. Any withdrawal that is permitted before the age of 59½ is subject to an excise tax equal to ten percent of the amount distributed

Some employers may disallow one, several, or all of the hardship causes. Someone wishing to withdraw from such a 401(k) plan would have to resign from their employer. Fortunately some employers give their employees the control to move some or all of their retirement account outside of their company plan.

Some people are hesitant in moving from these investments. Think about the structure of 401k. You were probably with a large financial company and you may have interacted with this company for 20 or 30 years. You became familiar with this institution and their website. You knew what funds were available and over the years it become a comfortable position. Like most people, you made few, if any changes to your portfolio. At most, you may have positioned more money in bond funds and less in stock funds, but maybe not.

Jim offers a free comprehensive financial review of your portfolio and a free copy of his DVD or book, The Ultimate Success Secret. You can get more information when you email Jim Byrd at jbyrd@safeharfin.com or when you call 1-877-251-1984.

James Byrd has 30 years of experience, is Top of the Table of the Million Dollar Round Table, and a member of the Better Business Bureau and the National Ethics Bureau. Safe Harbor Financial Services has been awarded Small Business of the Year 2012 for South Eastern Alabama by the Easter Shore Chamber of Commerce.

Safe Harbor Financial Services
9056 Merritt Lane
Daphne, AL 36526
866-251-1984 or 251-625-1226
www.safeharfin.com
Hours: Monday - Friday: 8:00am - 5:00pm
Closed Holidays

You can visit www.safeharfin.com for upcoming events or listen to James Byrd Tuesday’s at 10:05 am on on WABF, 1220 AM, and on Talk FM 106.5 on Sunday’s at 6:00 pm. You can also see him every other Thursday morning between 8:00 am - 9:00 am on Studio10.

Sponsored by: Safe Harbor Financial Services