A Woman’s Perspective on Money and Investing

February 2021

Hi ladies,

As women, we historically haven’t been as involved in financial or retirement planning as our male counterparts. That is, until we are forced to be for one reason or another. We then find ourselves scrambling to understand what we have, how to protect it, and grow what is there. Sometimes this process is easy to pick up and run with, but other times, it is daunting and feels insurmountable. Or, maybe we are just getting started with investing and don’t know where to turn for advice.

This is why I am starting a monthly email series, targeted just to women. I am calling it “My Two Cents” and I hope you find these brief communications not only interesting, but also helpful. I look forward to your feedback and thoughts on topics you would like to learn more about.

With it still being the beginning of a new year, I decided to kick off the series with some New Year’s resolutions focused on investing you can consider for 2021! Investing is a powerful tool for building wealth, and it’s never too early or too late to start. Here are a couple tips if you’re ready to begin investing or to boost your current portfolio if you are already invested:

Getting Your Affairs in Order: Knock Out Your Debt and Prepare an Emergency Fund
Before you begin investing, I recommend paying off any high interest debt you may have (typically interest rates of 5% or higher). This is because it will likely cost you more in interest to carry that balance than you would be able to earn in the short-term by investing.
It’s also a good idea to establish an emergency fund prior to investing. Having a cushion to protect you in the event you need a major surgery, your car breaks down, or we find ourselves in another year like 2020, is always a good idea. Ideally, your fund should be the equivalent of approximately three to six months of expenses.

401k Check-Up
January is a great time to review your company retirement plan. The easiest and most tax efficient way to save is through an employer-sponsored retirement plan or a personal retirement account, like an IRA or Roth IRA. If you participate in your company’s retirement plan, like a 401k or 403b, are you contributing enough to maximize any employer contribution? That’s free money! If you received a raise last year, did you give your retirement plan account a raise as well? If you didn’t, you should make that adjustment now. Whenever you receive a raise, you should immediately update your deferral amount. If your employer does not offer a retirement plan, or you are self-employed, you should still be contributing to a personal retirement plan. The contribution limit for an IRA or Roth IRA is $6000, with an additional $1000 if you are over age 50. If you are self-employed, check with your financial advisor or tax advisor to see what type of account makes the most sense for you. Contributions often can be made as a direct deposit from your paycheck or directly from your bank account. If you have plan accounts from previous employers, this would a good time to review your options for consolidating accounts as well. Many retirement plans allow rollovers of your previous plan accounts into your current employer account. You could also consolidate old employer plan accounts into an IRA.

Start off the year by clearing out the clutter of multiple accounts.

Start with A Dream, Then Make a Plan
Whether you made the money you are investing, inherited it, or it was gifted to you, you should take the time to dream about what you want that money to do for you in the future. You may have specific goals in mind, like buying a home, saving for college, or retiring in paradise. Or, you may not know exactly what your goals are yet, but you know you would like to enjoy life without worrying about how to afford your lifestyle. Either way, the time to start saving is now.

When it comes to choosing a financial advisor, I recommend looking for someone who is credentialed, has an investment philosophy you agree with, and can clearly explain how they are compensated. Just as important, however, is choosing someone you feel comfortable talking to, trust, and who truly understands your personal goals – not just your financial goals.

When it comes to New Year’s resolutions, I think it is always best to set reasonable goals, establish achievable milestones, and grant yourself grace when you encounter setbacks. After all, setbacks are part of every journey. What’s important is that you keep moving towards your goal.

If you have enjoyed reading “My Two Cents,” please also check out my new monthly video blog series, “Dream.Plan.Do.” The first interview will be posted in early February to our website, riverwealthadvisors.com, as well as on our Facebook page.

I look forward to continuing the dialogue!

Until next time,
Jen



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