401K and IRA Best Investment Strategy for 2014 and 2015

By James Leitz

     

    

If you invest money in a retirement plan on a regular basis the best investment strategy for 2014 and 2015 is an investment strategy that will keep your investment portfolio on track without subjecting you to a lot of risk. Most of the investment options in a typical 401k and many IRA plans are mutual funds. To achieve long-term growth with only moderate risk you need to invest money in both stock funds and bond funds. What's your best strategy for 2014 and beyond?

After 30 good years bond funds will turn sour when interests rates turn around and go up (that's the way bond funds work). Stock funds have returned well over 100% since early 2009. Interest rates are near all-time lows, and an abrupt reversal in rates could cause havoc in both fund categories, resulting in big losses for investors in 401k and IRA plans. It's time to get proactive to protect your retirement assets.

The best investment strategy for average long-term investors traditionally focuses on a mix of stock funds and bond funds. Picking the best stock funds and best bond funds to invest money in from your list of options is a secondary consideration. Concentrate instead on asset allocation and investment strategy. In other words, how do you spread your money across the different options offered and what kind of strategy do you use to make sure you stay in a position that fits your risk profile? We're talking money management here, and we're talking about your financial future.

Let's say that you consider yourself a middle-of-the-road investor. You are willing to accept moderate risk in pursuit of higher than average returns. Wall Street has traditionally suggested that the best investment strategy is to invest money with about 60% in stock funds and 40% in bond funds. To protect yourself against the possibility of heavy losses in the future, why not get more conservative with your asset allocation?

In a 401k plan asset allocation is your responsibility and you must make decisions on two levels. First, for the investment assets you already have in place (your portfolio allocation). Second, for the new money you invest each payday (your contribution allocation). These allocations can both be the same, or they can be different. For example, upon review of your statement you might see that 70% of your portfolio assets are in stock funds, with 30% in bond funds. And you have 50% of your new contributions going to each.

Here's my suggestion for the best investment strategy for cutting your risk while keeping stock and bond funds an integral part of your investment mix. No matter what your portfolio allocation is now, change it so that you have equal amounts invested in these three areas: stock fund(s), bond fund(s), and a safe investment option. If your 401k offers a STABLE ACCOUNT option that pays a decent interest rate, use it as your safe option. If it doesn't, go with the money market fund. Remember, interest rates are extremely low, so money market funds presently pay very little interest. On the other hand, some 401k stable accounts pay higher interest rates than you'll find anywhere else.

For your allocation for new contributions set it up the same way with one-third going into each of the three options. If you have an IRA that you intend to contribute to on a regular basis, have it set up so that money automatically flows from your bank account to your IRA account. Split the existing money in your IRA into the same three areas as above, and set it up so that equal amounts flow into a money market fund, stock fund, and bond fund each month.

The above strategy will not be the best investment strategy vs. the traditional 60%-40% strategy if both stocks and bonds continue their winning ways in 2014 and beyond. You have traded higher growth potential for greater safety. If, on the other hand, interest rates rise significantly and throw a wrench into the stock and bond markets, this investment strategy should work to your advantage.

Let's say that stock funds and/or bond funds decline significantly in value for a couple of years or more before rebounding. My suggested strategy has two primary advantages. First, your losses will be lower. Second, the new money you have flowing into stock funds and bond funds each month or each payday will buy more and more fund shares as fund prices get cheaper. When prices rebound you will break even and start to show a profit sooner because you bought stock funds and bond funds at cheap levels. That's called dollar cost averaging... which is a crucial part of the best investment strategy.

Sometimes the best investment strategy is to take aggressive action - like after a major decline in stock prices. Other times the best strategy is to be more cautious by cutting the risk in your portfolio... while you continue to invest money in stock funds and bond funds. In 2014 and beyond, I believe that caution is your best strategy.

A retired financial planner, author James Leitz has an MBA (finance) and 40 years of investing experience. His complete investing guide for beginners, Invest Informed, teaches how to invest starting with investment basics. Check out his book, INVEST INFORMED at http://www.Amazon.com.

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Investing in Shares and Stocks

By Derrick King

Things That You Might Need to Know Before Investing in Shares and Stocks
There is no doubt whatsoever that investing in shares and stocks is among the best moves that anyone who is in search of wealth can make. Investing in shares basically means that you buy a fraction of a company and you get to earn interest from the share. Stocks are available when a company wants to raise money and they choose to sell part of their stocks to the public over other methods that can be used to raise cash. Before you go to buy stocks of a company, it is important that you be familiar with the background of that particular company, look for their track record and make a decision of the type of investor that you would wish to become.

Use of Software in Buying Shares and Stocks versus Online Purchasing
As an investor, one golden move that you can make is to buy shares and stocks using stock trading software. This is highly recommended especially for those that are taking those final steps in jumping into the world of trading stocks. Although this software helps you in reducing work load involved while buying shares, you still are required to make sound financial decisions based on shares and stocks that you would wish to purchase. When one is about to buy shares, there is a lot of information that you have to do research on plus make the decisions, this work rate might easily discourage you..

Software comes in handy mostly for new beginners. This is because it analyses stocks all over the worlds markets and generates essential market information that you need before you get to decide on where to invest. One good thing about the software is that it gives you updated information and so you are set not to miss out on any chance of making cash. Another way to buy shares is through online share dealing. Although you should not rush to make any decisions before buying shares and stocks, online methods can save you a great deal of time and effort when you set out. Software provides you with relevant information that you need just by a click of the mouse. It also gives you that chance to compare performance of different stock markets all over the world.

Shares and Stocks at the Share Market and the National Stock Exchange
Everyone thinks about making cash effortlessly upon the mention of shares and stocks. This thought might be proved to be true or false at the same instance and this has been proven time and again. As an investor or one to be, it would be wrong for you to only look at the profit angle of this type of investment since a loss is also not all that impossible. How you set your sail is what determines how your wheel of fortune will turn, either in your favor or not. The process of investing in NSE has turned out to be one of the easiest processes with introduction of online trading. All that you have to do is to have an online trading account and then you are free to take part in buying and selling shares in the world over.

It is highly advised that you get yourself a broker who will handle all transactions related with your investing. You also get complete access to complete information from NSE including news updates, losers, gainers or recommended stocks. Success is guaranteed if you get to trade right irrespective of the market that you get to invest in, either it be NSE or BSE. Trading right would generally mean:

- Having enough information about a company or stock market before you set out on investing.
- Having a stock broker.
- Using a sock trading software before you carry out any transaction and make the right decisions.
- Renting shares instead of fully purchasing them when it comes to accompany that has fluctuating market performance.

I hope this gives a little insight into shares and stocks.

Derrick King is an Author and writer for many websites including http://onlinesharedealing.org but reminds you that this article is not to be considered as sound financial advice it is the point of view of the author only. All major financial decision should be verified by an accredited financial advisor. Stay lucky.

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Why You Should Buy Your First Real Estate Investment Property Today

By Ketul A. Kothari

When it comes to real estate, there are plenty of people out there that are unaware of the many tax advantages available for real estate investment properties. One of the most popular ones is that of the 1031-Exchange. For those of you unfamiliar with this, the 1031 Exchange is actually a section within the United States IRS Code which states that certain eligible properties may be exchanged for properties of equal or higher value without having to pay any taxes on the transaction.

This tax treatment of trading properties for larger ones is an absolute god-send for the serial real-estate investor. Imagine having the ability to regularly trade up one investment property for a larger one every time you had the resources to be able to upgrade? Well, that is very well possible thanks to this very important IRS provision! Larger properties mean generally higher rents allowing you to increase your annual cash flow, so it is definitely a good idea to trade up for bigger properties whenever you get a chance.

Other tax advantages for rental property owners include tax deductions on interest expenses, depreciation expenses, repairs, travel expenses, and insurance costs.

Interest Expense:
Any interest expense on a rental property is tax deductible. This means deductions for mortgage interest payments, and interest on credit cards for expenses that were used in a rental capacity.

Depreciation Expense:
As a real estate investor, you have the opportunity to claim depreciation on your property as a deductible expense by deducting a portion of the value of your property over the span of a couple of years. While this tax deduction provides the investor with immediate benefits, this benefit is eventually returned to Uncle Sam when the property is sold. This benefit is lost primarily because depreciation serves to reduce the total cost basis for the property, so any capital gains are taxed from the lowered cost basis. This concept is known as depreciation recapture.

Repairs:
Any repairs on your investment property are a deductible expense in the year that you pay for the repair. This means things like painting rooms, and replacing faulty lighting. Any improvements to the property, on the other hand, are not deductible.

Travel Expenses:
Real Estate owners are eligible for tax deductions every time they have to travel for their rental activity. This deduction could be broken down one of two ways: either as actual expenses (receipts may be required), or the standard mileage deduction (which is currently 56.5 cents per mile for the 2013 fiscal year).

From the above deductions, it should be clear that there are plenty of tax advantages available for real estate investors! If you haven't already, it's definitely a good idea to start claiming all the above deductions you are eligible for. They may very well make a difference between losing money on a property versus earning a profit.

About the Author: Ketul Kothari is an accomplished investor and entrepreneur. He is also the author of several popular business books including Invest Your Way to Riches. Ketul's upcoming book, Presenting Greatness, will reveal the presentation techniques and strategies employed by some of the world's leading presentation gurus. Follow Ketul on Twitter.

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