"What are the most common mistakes regarding financial planning?"
Actually, there are several:
- First, procrastination. If you understand the time value of money, and if you don't already have a financial plan, you will need to get started today, since every day that you delay costs you money.
- Next, many people take unnecessary risks. A good financial plan is one that is prudent.
- Another important consideration is to be properly diversified. Too many eggs in one basket is a perilous strategy!
"Is there a simple guideline that will allow me to fund a long-term financial plan?"
Yes, but it may sound glib. To achieve financial independence:
- Live below your means—spend less than you earn.
- Allocate a portion of your earnings that you do not spend for short-term savings (an emergency fund) and the rest to your long-term financial plan.
- Stay the course—stick with your plan.
"Do I need a large sum of money to get started?"
No. If you are beginning to build your long-term financial plan, the most important first step is to establish a discipline of regular investing. Next, you must "stay the course" to arrive at your financial goals. A disciplined adherence to the plan is far more important than waiting until you have a large sum to invest.
"How do I get started?"
The hardest part is to decide to start now. First, call Management Horizons today at (423) 648-3000 to set up an appointment. During this meeting, our professionals will work with you to set realistic, achievable long-term planning goals. You will have taken the first step toward building your financial future. Once the plan is set, we will help you implement the strategy. Now you can take charge of your financial future.
"How much can I contribute to my IRA?"
This is a bit complicated. If you qualify, you may invest $2,000 for the tax year to your plan. If you are married, your spouse can also contribute $2,000 to his or her plan. The good news is that the contribution limits will increase to $5,000, phased in over the next several years ($3,000 starting in 2002, $4,000 starting in 2005, and $5,000 starting in 2008). This is good news for those over 50 years old who qualify. Starting in 2002, "catch-up contributions" can also be made to an IRA.
"What is the deadline for my IRA contribution?"
The deadline for the calendar year is April 15th of the following year or the first Monday following April 15 if it falls on a weekend.
"I am self-employed. What retirement plan structures are available to me?"
If you have self-employment income from an unincorporated business, you can make contributions to a Keogh plan. Another plan available to self-employed workers is a simplified employee pension (SEP). Generally, a SEP allows the employer to make contributions to a pension plan for the employees, including the owner, without becoming involved in a complicated pension plan.
"What is the difference between a defined-benefit plan and a defined-contribution plan?"
A defined-contribution plan specifies and requires contribution to the plan by the employer on regular intervals. A defined-benefit plan specifies the benefits that will be paid to plan participants based upon a series of factors, usually including length of service, income during a period of time towards the time that the participant is scheduling to retire, etc. Defined-contribution plans are generally far more flexible for employers than defined-benefit plans.
"Will a trust be helpful to me in long-term financial planning?"
Perhaps. Depending on your circumstances, you can possibly avoid estate taxes if an irrevocable trust is established. Working with our professionals and the legal team, we can advise you on the advisability of a trust for your needs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|||||||
|
|
|||||||