Wealth Management Blog | WrapManager (20)

What's the Difference Between a Roth and Traditional IRA?

Posted by Michael J. O'Connor | CWS®, Vice President Investments

April 18, 2017

What's the Difference Between a Roth and Traditional IRA?

Both a Roth IRA and Traditional IRA (Individual Retirement Account) can potentially help meet your retirement savings goals. The main difference between the two is: with a Roth IRA, taxes are paid upfront, whereas contributions to a Traditional IRA are made “pre-tax,” and reduce taxable income for the year.

Age and income are two significant factors to consider when choosing a Roth or Traditional IRA. Couples or individuals in a low tax bracket as well as younger people may be better off with a Roth. Earnings grow tax-free, and contributions can be withdrawn at any time without penalty. Individuals or couples in a higher tax bracket may choose a Traditional IRA to reduce their taxable income, or because their income is too high to qualify for a Roth. A Traditional IRA is also a good choice for people who expect to be in a lower tax bracket during retirement.

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Saving for Retirement Investing 101

Is Hiring A Financial Advisor Worth It?

April 12, 2017

Editor's Note: This post was originally published July 2016 and was updated in April 2017 with new information for your benefit. Investors often gauge a financial advisor’s value by measuring what’s tangible: short-term performance and financial advisor fees. However a study conducted by Benjamin Cummings of St. Joseph’s University finds there is a positive correlation between hiring a financial advisor and seeing positive impact on your net worth. The study places value on the intangible benefits a good financial advisor can provide you. Investors should not hire a financial advisor based solely on performance and fees, as doing so would overlook the positive value financial advisors can contribute through intangible benefits – acting as a sounding board for investment ideas, providing you guidance during volatile times in the market and helping you sleep at night. These benefits are valuable to not only your financial health, but also your personal health. [+] Read More

Nuveen Believes the Political Backdrop Can Support Growth

April 12, 2017

Economic Growth, Not Politics, Is Probably the Biggest Risk For some time, we have argued that equities and other risk assets looked overextended following their strong run-up since the election. In recent weeks, equities have been trading sideways and government bond prices have recovered. More than politics, the economy probably presents a more probable roadblock for equities. We think economic sentiment may be too high and elevated confidence may make investors vulnerable to downside economic surprises. To be sure, we are not expecting a significant economic slowdown, but the nearly non-stop pace of positive economic data is unlikely to continue. At some point, a setback will likely be triggered by a manufacturing decline, soft oil prices, weakening data from China or some other factor, which could spark a risk-off phase. Nevertheless, we remain constructive in the medium and long-term toward risk assets, but are growing increasingly cautious about the short-term outlook. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

Nuveen Observes Equities Sag as Political Optimism Returns to Earth

April 5, 2017

Where Can Investors Find Value in These Markets? Stocks experienced their largest one-week decline since the election, as the S&P 500 Index fell 1.4%.1 Most losses occurred on Tuesday when it became clear that the Republican health care plan was facing trouble, signaling that President Trump’s pro-growth economic agenda could falter. Small cap stocks, financials and industrials fared the worst last week, with utilities and REITs gaining ground. Treasury prices rallied for a second straight week, while the U.S. dollar fell for the third week. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

What is ESG Investing and Does It Make Financial Sense?

April 4, 2017

Corporations in America are aware that public perception is important. That’s why many companies have made strides in recent years to emphasize their efforts in caring for the environment, providing equal opportunities to employees, and being active contributors to small communities. It’s PR 101 for building trust and goodwill towards a brand, which can ultimately help drive sales. [+] Read More

How Will Rising Interest Rates Affect Your Investment Portfolio?

March 30, 2017

On March 15, the Federal Reserve raised interest rates for the first time in 2017. Federal Reserve Chairman Janet Yellen moved the benchmark interest rate a quarter percentage point higher, to a range of 0.75% to 1%, and the Fed indicated that the market could expect two more rate increases this year.1 So what does this all mean for you? The answer depends on whether you look at it from a standpoint of being a borrower, a saver, or an investor. Later in this post, we’ll take a look at all three scenarios. But first, here’s a bit of background as to what an interest rate increase actually is, and why they occur. [+] Read More

Lord Abbett: Why HSAs Matter More Than Ever

March 29, 2017

Many experts expect healthcare costs will continue to rise, making it important that advisors help their clients plan ahead. According to the Kaiser Family Foundation, health care has become somewhat less affordable, even among those with health insurance. Since 2015, larger shares of people with health insurance say they have a difficult time affording their healthcare costs: from 27% to 37% for premiums; 34% to 43% for deductibles; and from 24% to 31% for copays and prescription drugs. Some experts estimate that a 65-year-old couple who retired in 2016 will need $260,000 to cover just healthcare costs in their golden years—6% more than the previous year's estimate of $245,000. That’s the highest estimate since such projections started in 2002, and chances are repealing and replacing the Affordable Care Act, not to mention the high cost of pharmaceuticals, could push retiree healthcare costs even higher. All of which highlights the need for advisors to discuss with clients the flexibility and power of Health Savings Accounts (HSAs). Read on for a summary of their analysis, or view the entire document here. [+] Read More

The Retirement Dilemma for High Income Earners

March 28, 2017

High income earners often find themselves in a bit of a quandary when it comes to retirement planning. Individuals making over $132,000 and married couples making over $194,000 are not eligible to contribute to a Roth IRA.1 For 401(k)s, the annual contribution limit of $18,000 ($24,000 for those over 50)2 is simply not enough for someone who made, say, $250,000 per year during their working years. Saving $18,000 a year is probably not sufficient for someone at that income level to maintain the same standard of living in retirement. Of course, this does not mean that high income earners should shy away from contributing to 401(k)s or other employer-sponsored retirement plans. The more a person can contribute to a tax-deferred plan, the better. But for high income earners, saving enough so that you can replace your income in retirement means turning to other methods and savings vehicles to reach your goals. Here are three potential options. [+] Read More

What is a Good Strategic Value Dividend Strategy Under Trump? - Federated Investors

March 21, 2017

Our first and primary answer to the client question of what one can expect from investment in a Strategic Value Dividend product is the opportunity for a high and rising income stream from high-quality business assets. For our more stock market-oriented clients, our answer is that we have historically delivered broad market returns, plus or minus, depending on the measurement period, but with a notably lower standard deviation. Both of those propositions were in effect prior to the US Presidential election; both remain in effect today. That being said, the world is now quite different than it was on November 8. How has this reality affected our companies? In short, not much, but let’s review some of the possible “talking points” involving the new administration’s policies. Keep in mind that all of these proposals are, for now, just media speculation and Sunday talk show fodder. But let’s tally up the potential pros and cons. [+] Read More

Savings Checkpoint! How to Know if You’re Saving Enough

March 15, 2017

Retirement and financial planning can essentially be broken down into three phases: Saving Investment Distribution (Retirement Income) For many people, that means spending our working years making an income to provide for our families and to save for retirement. We then invest our savings in hopes of achieving a rate of return over time, to grow the assets and provide for our retirement. And finally, we devise strategies to generate retirement income from our savings. [+] Read More