Saturday, September 2, 2017

How to Manage Your Finances and Trust Funds Like a Professional

Research from the reputable financial giant Bankrate indicates that significantly more Americans drink coffee on a daily basis than own stock market investments, 61% to 48%, respectively. 

About one-quarter of United States citizens are fortunate enough to inherit money through trust funds. As indicated, not everybody can afford to invest money, meaning those who can and do stow away money for themselves and others are of fortunate financial position. 

It's easy for people to ruin their finances and trust funds, causing financial ruin and worry in their own, and others', lives. Here are several tips for managing personal finances, just as a professional would.

Focus on Retirement Accounts Early On

Some retirement accounts are matched dollar-for-dollar by employers. Investing in these accounts, most notably the 401(k) plan, earns extra income by simply saving it in a retirement account. 

These plans should be matched until employer's maximum contribution amounts are reached. While such investments don't earn interest over time, unlike stocks, bonds, and mutual funds, employer matching is nearly always more valuable for your interim and long-term financial position. 

If your employer offers multiple retirement accounts, invest in them until employers won't fund any further - it's unarguably worthwhile.

Decide if Trust Funds are Worth Using

Individuals with little disposable income shouldn't stash away assets into trust funds, unless they're 100 percent, positively, absolutely sure that money wouldn't better serve any purposes in the owner's lifetime. 

Some companies, such as Home State Bank, know that trust funds can provide lifetimes of financial support for beneficiaries that inherit them. However, the most important aspect of considering a trust fund is timing. 

If you have a high income, with mountains of disposable income laying around, trust funds can reduce which tax bracket you're in. Situations not benefiting significantly from such a tax break aren't ideal for trust funds.

Don't Invest in Single Stocks

Stock performance depends directly on that company's financial performance. As such, purchasing one, two, or five stocks isn't a good idea. 

Rather, consider investing in shared, fully-diversified mutual funds, but only if retirement accounts are fully funded and plenty of low-risk assets are owned.

State Income Tax Matters

Everyone in America must be federal taxes. However, those in certain states, like Florida or Tennessee, aren't subject to state income taxes. 

These rates can be as high as California's 13-plus percent. As such, move to states without income taxes as soon as possible.

Money is an integral part of life. Unfortunately, few people don't know how to properly manage their finances. 

Don't get into trust funds unless you're loaded, aim to diversify stock investments - that's if you're set on low-risk investments - and make sure to create and closely adhere to budgets and plans.

1 comment:

  1. Savings has a lot to do with the way we manage our finances. Money management skills have to be acquired at an early age. I still thank my parents for being seemingly harsh when they asked me to pay for my own insurance. It paved the way for a better understanding of managing my finances, which later on helped me save and invest in trust funds more wisely.


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