Open a Roth IRA for your child as soon as she has her first job. Give her decades of tax-free growth, and teach her about money in the process. Why You Should Open A Roth IRA For Your Child Tax-Free Growth A Roth IRA is not taxed while it grows, and withdrawals in...
This post explains how to fund a Roth IRA for your child with cash income that is not reported to the IRS. Background Your child must have earned income that the IRS knows about to contribute to a Roth IRA. It's easiest to open a Roth IRA for your child when they have...
What is Savings Rate? Savings Rate is a key indicator of your financial health. It's the percentage of your annual gross income you're saving. Total Annual Savings / Total Personal Income = Savings Rate Example: Assume your annual gross income is $300K. If you save...
What is Equity Rate? Equity Rate is an important financial metric. It's the percentage of your investment portfolio that's in stocks. "Equity" is another word for "stock." Equity (Stock) Investments / Total Investments = Equity Rate Example: Assume you have $2...
What is Liquid Term? Liquid Term indicates the number of years you could live on your current liquid assets. "Liquid assets" refers to money that is not in a retirement account. This includes cash accounts (checking and savings) and nonretirement investment accounts...
Most people do not have a great way to monitor their finances and assess their financial health. Tools like Mint and Personal Capital let you see all your accounts in one place and track your spending. This helps to some degree, but it falls short in answering key...
Investing your HSA for retirement means skipping the default cash account and investing in stocks instead. Here's how. Most HSA Money Is Not Invested Money in a Health Savings Account (HSA) goes into a risk-free cash account by default. This is because most people use...
There are three types of investment accounts. This article gives examples of each type and how it is taxed. Types of Investment Accounts The three types of investment accounts are: Pre-tax. Tax-free. Taxable. Pre-Tax and Tax-Free Pre-tax and tax-free accounts are also...
In our previous article and video, What is Evidence-Based Investing?, we summarized three principles of Evidence-Based Investing. Those principles include: Passive > Active Global diversification Factors can increase expected return This article goes into more...
One principle of Evidence-Based Investing is Global Diversification. Diversification means you don't have all your eggs in one basket. This means owning thousands of stocks (likely in the form of mutual funds or ETFs), as opposed to owning a handful of individual...
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