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Spring Clean Your Finances

Written by Mark Govoni

Spring has sprung and while you may be focused on cleaning out your gardens and home, don’t forget about sprucing up your financial strategy.

Here are a few tips from our team to refresh your financial outlook. For more information, do not hesitate to give us a call!

Consolidate

Move 401(k)’s from old employers into a self-directed IRA

401(k) programs are frequently expensive to maintain and always inflexible. Most 401(k) plans can be transferred into a self-directed IRA once you have stopped participating in a previous employer’s plan.

 

Simplify

Diversification does not equal number of products

Investors frequently believe that simply by investing into multiple funds they are sufficiently diversified. Funds’ holdings overlap significantly. Often the top ten holdings will be similar across a large number of funds.  Choose investments which target different areas of investing, for example, a large cap domestic fund paired with a small cap and an international fund.

Understand what you own

If you cannot easily explain why you own something or what the company does, either investigate the company more thoroughly or sell it.

 

Utilize

Take advantage of free money

401(k)

Contribute up to your employer match.  Many employers will match your contribution dollar for dollar up to a threshold amount.  In other words, if your employer matches your contribution up to 3 percent, your 3 percent contribution will be equal to a 6 percent overall contribution.  The additional 3 percent is free money to be invested for your retirement.

IRA

Several IRA sponsors will now match a percentage of your IRA contribution.  While the matching contribution is nowhere near the match of many 401(k)’s, free money is free money and should be taken advantage of.

 

Spring cleaning is not just for your closets anymore. Take this time to refresh all important areas of your life – especially your finances. If you are better at dusting than diversifying, call Boston Asset Management. Providing financial solutions is what we do.