Calling All Baby Boomers, By Tuya Lutbayar
Jun 27, 2016 11:38AM ● Published by Elena Hutslar
If you are a baby boomer whose investments have lost value or you’ve delayed retirement (or think you’ll never retire), please read this. You’ve worked hard, 160 hours a month for the last 40 years. What happened? Perhaps you made a wrong investment and/or you paid someone to lose your money. How can your money still work for you? There are some basic concepts to consider regarding investments.
First, have you heard of the Rule of 72 and compounding interest? By dividing 72 by the annual rate of return, you can get an estimate of how many years it will take for your initial investment to double. For example:
72/1% = 72. Your investment doubles every 72 years.
72/6% = 12. Your investment doubles every 12 years
72/10% = 7.2. Your investment doubles every 7.2 years.
Second, there are only three rates at which your money can grow: fixed, variable, and indexed. A fixed rate is secure, but there is usually minimal growth. Variable returns usually involve stocks and bonds that are found in most retirement plans, including 401(k), 403(b), SEP IRAs, Roth and traditional IRAs. There is also an index strategy in which you can participate when stocks and bonds are up, but be protected from potential loss when they are down.
Third, know when to pay your taxes. For example, if you were a farmer, would you rather pay taxes on a bag of seeds now or on the entire harvest next year? Likewise, would you rather be taxed on $100 now or on the growth from $100,000 later?
With an understanding of these concepts, think of how your finances could be better off. You could save yourself 10-15 years of working. You could retire earlier or with more money. Let me help you protect what you have now and reach your goal.
Tuya Lutbayar is a licensed independent contractor who works with over 75A+ rated financial companies, such as Transamerica, Nationwide, Voya, Everest, and Pacific Life. Please call (925) 357-0525 for a complimentary consultation. 3478 Buskirk Ave. Suite 1000, Pleasant Hill. Appointment only.