STANDARD INVESTMENT ACCOUNT
New investors might or might not be familiar with the various account types that investment firms offer. In general, people associate personal investing with an IRA, however, that's not the only option. A standard investment account gives clients more flexibility, but with different tax implications. In a standard investment account, clients will have the freedom to put money into or take money out of your account without being subject to an early withdrawal tax penalty. Conversely, IRAs are designed to satisfy future retirement needs, thus the Internal Revenue Service (IRS) may penalize individuals for withdrawing capital gains before retirement. There are also no contribution limits with regard to personal investment accounts.
Although, standard investment accounts are more flexible than IRAs, capital gains tax must be paid on an annual basis. IRAs allow individuals to defer capital gains tax until retirement, while Roth IRAs defer capital gains tax even indefinitely.
A Roth IRA is a type of retirement savings account in which distributions and investment earnings are tax-free.
A traditional IRA is a type of retirement savings account in which investment earnings are tax-deferred until retirement. Traditional IRAs serve as a supplement or alternative to employer-sponsored retirement plans or Roth IRAs.
*Subject to current Internal Revenue Service (IRS) publications. We recommend seeking the following link for further detail: http://www.irs.gov/pub/irs-pdf/p590.pdf
***Your financial and/or employment situation may not be condussive to these standards, and you may be subject to special rules dictated by the IRS.
Parents can open investment accounts for their children. Account ownership and management is connected to the parent. The parent transfers the account when the minor becomes a legal adult.
Truth Investments offers limited financial planning services for individuals who have specific financial goals. The scope of our financial planning includes personal investing, retirement, and education planning. We can help you estimate the appropriate amounts you would need to save in order to achieve a financial goal or enough fixed income to meet your desired lifestyle in retirement.
Consultation and financial planning is complimentary for our clients because we believe the more you understand about investing and the more we know about your goals, the easier it will be to determine the most appropriate investment product. Unfortunately, our financial planning services do not include tax, estate, or insurance planning.
FINANICAL PLANNING SERVICES
FINANICAL PLANNING FOR INDIVIDUALS
A Truth Investment advisor can help you create a retirement and/or education plan. If requested, we will take the following steps in helping you to achieve your goals:
1. Establishing and defining the relationship with the client
2. Gathering client data
3. Analyzing and evaluating the client's financial status
4. Developing and presenting financial planning recommendations
5. Implementing the financial planning recommendations
6. Monitoring performance
The main purpose of a Truth Investments financial plan is to help clients meet specific goals. Although, we can't guarantee returns, we can help lead you in the right direction by setting up various what-if scenarios. For example, if you've estimated that you'll need $25,000 for your 5-year old's college education and have $2,000 as an initial investment, we will try to engineer a plan that will satisfy your needs.
The plan will include our expectations for a reasonably achievable investment return and a monthly payment schedule. In the above scenario, you would need to pay approximately $83 per month, assuming a 6.5% annual return.
We can help clients plan in a similar way for retirement needs. Indeed, the number of different scenarios that can be drawn up to meet client objectives are virtually endless. We probably won't be able to help you turn a $1,000 into a million, however, you and your Truth Investments advisor will attempt to establish the most reasonably obtainable goal.
When entering data, be mindful that interest rates are not guaranteed and are key in meeting investment goals. Typically, higher risk products offer higher return potential than lower risk products. Therefore, it's important to consider your risk appetite when entering investment rate of return scenarios.
To learn more about rate expectations click here.
The interest (investment) rate is the annual rate of return you expect from your investments after taxes. The actual rate of return is largely dependent on the type of investments you select. For example, based on historic index averages and an assumed ‘normal’ global economy, gross returns are expected to average 10-12% per annum. However, returns can swing substantially from year-to-year. Volatility is primarily driven by market and economic dynamics. Return possibilities for the stock market and this strategy are extremely broad. One of the worst market returns in history occurred in 1931, when the Dow Jones Industrial Average fell over 50%. The Dow’s best return was recorded in 1915, when the index rose over 85%. Over long periods of time most equity markets have delivered positive returns 7 out of 10 years on average.
*United States Stocks measured using the Russell 3000 Index
**Short/Medium-Term Bonds measured using the Barclays Capital U.S. Aggregate Index