The 4% Safe Withdrawal Rate (SWR) was first introduced by William Bengen in 1994 and later supported by the Trinity Study in 1998. The rule basically states that when you hit retirement age, you can withdraw 4% of your total retirement savings initially. Each year, you increase the amount by the inflation rate. Assuming you … Read more The 4% Safe Withdrawal Rate Retirement Drawdown Rule
Why would you give the government an extra cut out of your retirement nest egg if you didn’t have to? We all work too hard and save too diligently to just willingly give the IRS a bigger piece of our retirement pie. If you ever end up paying an early withdrawal penalty for taking funds … Read more IRA and 401(k) Early Withdrawal Penalty
There are many different financial products out there that can help you achieve your saving and investing goals. Each type is better at meeting specific financial objectives, while others are better for different purposes. When you start investing, it is a good idea to become familiar with the more common ones. I am an experienced … Read more Different Types of Saving and Investment Vehicles
When you stop working and have to start withdrawing money from your retirement accounts, you have to decide the best way to withdraw money from different accounts. Do you take money out of your tax-free accounts like Roth IRA and Roth 401(k) first? Or do you withdraw from your tax-deferred accounts like Traditional IRA and … Read more Tax-Efficient Retirement Withdrawal Strategy
Asset Location is a tax-efficient investing strategy to help you minimize taxes and grow your investments faster by holding investments in the best-suited investment accounts. This strategy leverages the fact that investments in Roth IRA and 401(k) are tax-free, and investments in Traditional IRA and 401(k) are not taxed until the money is withdrawn. For … Read more Asset Location: Best Accounts for Different Investments
One of the most powerful forces in finances is compound interest. Compound interest is interest that is paid on the principal and also on the interest that previously earned on your investment. This helps you grow your investment at an accelerated rate. On the other hand, compound interest can work against you — for instance, … Read more Compound Interest Formula and Examples
You may have come across references such as the S&P 500 has grown 10% annually for the past 30 years or something to that effect. You may wonder what that means and where did they get that number. When someone mentions an annualized return, most likely he is referring to the Compound Annual Growth Rate or … Read more Compound Annual Growth Rate (CAGR) Calculation and Examples
One of personal finance best practices is to have 3 to 6 months of an emergency fund. Since the money has to be accessible and you can’t risk losing the money, the best place to keep your emergency fund is in a high yield savings account or a short-term CD. These are also the best … Read more Negative Real Return: Your Savings Might Be Losing Money
Learn from your mistakes is good advice, but learn from other people’s mistakes is even better. I’ve been investing since 1996. In the process, I have learned a lot, mainly from trial and error. Today, I’d like to share some of the mistakes I’ve made when I was a newbie investor, along with some pitfalls … Read more 18 Common Retirement Investing Mistakes and How to Avoid Them
Having a written business plan is essential when you are just starting as an entrepreneur. It helps you evaluate your business idea thoroughly before you begin, makes it easier to obtain a business loan or funding from investors, and provides you with a direction on the path to success. Because it has such a high … Read more How to Write a Business Plan for Small Business