Whats Your Plan for Retirement?

When interest rates were bare bottom some of us felt that moving funds around to bank accounts earning more wasn’t worth our time.  Now that interest rates have moved up we wanted to loop around to remind everyone that periodic review of the returns on retirement funds is vital to any retirement plan. Money is flowing from bonds due to a perceived rise to higher interest rates, so a rotation seems to be under way.

For those who seek to have their cash readily available, now is the time to research better return money market accounts than your standard bank or money market account.  If you are dedicated to maintaining your funds under one investment company umbrella, so everything is in one place and on one periodic statement, we suggest you call to inquire about additional options.  Be sure to question availability of funds without penalty and risk of loss of capital if you are staying with these readily available investment fund types.  Query regarding minimum balances and limits/cost of transactions, such as withdrawals.

Online savings accounts can be a new product for some long-term investors.  What you give up in a brick and mortar bank or brokerage office, you more than make up for with higher yields.  Well-known names such as American Express, Barclays and Goldman Sachs offer these as well as internet-based only investment companies.  Again, for those concerned with availability and not locking up funds, these savings vehicles offer many aspects you are used to and interested in, yet with yields ten times what you are receiving now.  If you are leery, start small by opening an account with a minimal balance and see how the process works and your ability to verify your balances online.

With rising interest rates a certificate of deposit or CD might not seem like a good option as you take on interest rate risk or become subject to a penalty should you need your funds.  Essentially, you deposit a sum of money for the bank to hold for a fixed term of anywhere from one to five years. You typically can’t access this money before the end of the term without incurring a penalty. But during its time sitting in the bank, your money can gain twice as much interest every year than if you’d put it in a high-interest savings account.  CDs are considerably lower risk than investing in stocks or mutual funds and are ideally suited for shorter-term savings goals. A CD is an accelerated savings account and by using a laddering strategy you can spread out maturities and have the peace of mind that a certain amount of funds will be available periodically.  An example is with $500,000 to invest and having access to $50,000 every six months. You can start the ladder using $50,000 CDs at 6 month intervals, thus one at 6 month maturity, then a year, then a year and one-half, etc.  You will end up with ten $50,000 CDs with varying rates, the longer term higher than the shorter periods.  The trick is to renew each at a five-year maturity in order to get the higher yield. The work is that you have to remind yourself to reset the term every 6 months upon renewal.

For those concerned about the FDIC insurance levels of $250,000 per bank, many large investment houses will allow you to invest in CDs of different banks all under their account umbrella.  You receive the FDIC insurance on a larger than $250,000 balance and yet maintain the convenience of everything in one place and one periodic statement as well.

Just to loop you back to an important thought, despite running the risk of losing your money, successfully investing in stocks has proven to work as the best long-term strategy. The best options are growth stocks and income stocks, or mutual funds or exchange-traded funds that pay regular, increasing dividends over time.  It’s coming on ten years of gangbusters returns in the stock market so we remind you that we might be at a time where there will be a pause in stock price appreciation, maybe even a longer term correction so rotating some of your positions to less riskier products discussed above might make sense. Just a reminder, you may need to pay capital gains taxes if you sell positions.

The flip side of risky investing is not investing at all because you’re afraid of the risk. The result is that you’ll shortchange yourself and make far less money than you need. An above-average rate of return is vital to a long-term retirement investment strategy, but for those approaching retirement (within ten years) pulling some chips from the table and letting the banks hold it for you makes very good sense.

Whether you are a business, individual, or non-profit – we will outline specific steps you can take to minimize taxes, maximize loan eligibility, or enhance the value of your property. With one call or email we will provide you with a professional, complimentary financial Statement evaluation – no obligation. Just visit Czarbeer.com/offer or contact us at info@czarbeer.com, or call (212) 397-2970 and we will be happy to help you and answer your questions.