Episode #14: The Double-Edged Sword

Today’s Prep:

Most of your financial decisions will produce both positive and negative consequences. David examines the double-edged sword of investing and all in 12 minutes!

(Click the featured times below to jump forward in the episode)

Equipping Points:

00:20 – The Double-Edged Sword Of Investing.

  • Many of your financial decisions contain both positive and negative consequences. Financial matters aren’t always black and white, and as Sir Isaac Newton once said “For every action, there is an equal and opposite reaction.”

1:10 – What To Do With Capital Gains?  

  • Let’s suppose you’d like to sell some stock. While you’ll get to keep the gains, you will have to pay taxes on those gains. As we said, investing is a double-edged sword. However, don’t let those taxes keep you from profiting on an investment, and remember, if you’ve lost money, you won’t have any gains to pay taxes on.

2:30 – What To Do With A Large Inheritance? 

  • Perhaps you’ve lost a spouse or a loved one, and you’ve come into an inheritance. We’d advise you not to make any quick decisions. Take time to grieve, and seek wise counsel. The steps you’ll take to make the most of that inheritance will be determined by the type of investment you’ve received.

4:17 – Whether To Make Tax-Deferred Or Tax Free Investments.  

  • Both Roth and traditional IRAs serve a purpose. A Roth IRA allows your money to grow tax free. A traditional IRA gives you a tax deduction as you invest and defers your taxes until a later time. They both have certain advantages, and sometimes, it’s wise to even consider using both.

5:59 – Should You Pay Off Your House?  

  • Perhaps you’re in a position to pay off your mortgage. However, you’re concerned about losing your tax deduction. This is certainly understandable as most folks are ready to pay off their homes by the time they retire. If you’re in this scenario, consider how much your money portfolio is making and the terms of your mortgage. Work with your advisor to determine whether it’s truly advantageous for you to pay off your house.

7:14 – Whether To Grow Or Protect Your Money.  

  • It’s typical of pre-retirees and retirees to waver between wanting their money to grow and wanting to protect it. Luckily, there are investment vehicles for both.

Today’s Takeaway:

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The host: David Dickens

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