Issue #52: The Key to Financial Freedom Part 4

As we continue to grow and continue to be Loud, will always appreciate you for taking 5-10min of your day to read what I have to say, thank you!

This week I encourage you to focus on your plan not the plan of the media or others, your wealth is not their wealth!

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Investments, Investments, Oh My!

Let’s be real there is WAY WAY too much information on what you “SHOULD” be doing with investing, too much out there making you feel bad for not have Millions in these investment accounts. I am here to tell you that what you see in the media or hear around the street is utter BS. Most people are in your boat, with not fully understanding what accounts to have, how to use them and ultimately do not have excess cash just to invest, we are all living a tight budget with inflation (mainly groceries) and all right?

I want you to know what accounts are out there and give some advice on how to approach them. No, this is no magic advice, no this won’t make you a millionaire however I believe it will give you a different perspective which can lead to a better investing plan overall.

What Accounts are there?

Individual Retirement Account (IRA): An IRA is a tax-advantaged investment account designed to help individuals save for retirement. It offers options like Traditional IRAs, where contributions may be tax-deductible, and Roth IRAs, which provide tax-free withdrawals in retirement.

IRA’s are a very easy way to get started, you can start for as little as $25 a month or hell just a one time $100. The importance here is to get something started.

Usage: I preach about having Cash Flow Flexibility (this would be a good article actually), in the case of IRA, if you know you have tax due or are always playing the tax game, then having your IRA “Contribution” fluid at the end of the year allows your accountant to help dictate which bucket to put money into, Either Traditional (Tax deductions now) or Roth (After-tax, but tax-free later). Keep your cash flow flexible, in case shit happens!

401(k) Account: A 401(k) is an employer-sponsored retirement account that allows employees to contribute a portion of their salary, often with employer matching. It offers a range of investment options and can provide tax benefits.

Under employer plans you will also see SEPs (Simplified Employee Pension Plan), Simple IRAs (Baby 401ks), and many others.

Usage: IF your plan has a match % of any kind, make sure you are contributing enough to receive the match because that is FREE MONEY! If you do not have a match in your plan, than it makes sense to focus on your own personal investment accounts listed in this article (Brokerage, IRA, etc).

Brokerage Account: A brokerage account is a general investment account that individuals use to buy and sell a wide variety of investments, including stocks, bonds, mutual funds, and ETFs. It offers flexibility and access to various markets.

When people speak about investing, these accounts are what they are typically talking about. Brokerage accounts are just a glorified savings account.

Usage: We just spoke about cash flow flexibility, well this account is utilize for that. When you can invest but need access potentially, the brokerage account is the way to go. You can always dictate where it goes, when you need it to go.

Savings Account: A savings account is a basic deposit account offered by banks and credit unions. It provides a safe place to store money and typically offers modest interest rates.

Typically FDIC insured, btw, I prefer High-Yield Savings accounts, currently around 5% annualized yield! Yield = return

Usage: Simply put, your savings account is your first line of defense. Once you have established your overall financial plan, having at least 3 months of expenses in this account will provide you with CASH FLOW FLEXIBILITY…no I won’t stop harping that term.

529 Plan: A 529 plan is a tax-advantaged savings plan designed for education expenses. It allows contributions to grow tax-free when used for qualified education costs.

Yes, a college savings tool, also yes it is an investing account with different purposes.

Usage: Not only can you use this for college but now you can use these for K-12! Depending on your family goals, this would be about 3rd/4th down the line of importance however has it’s ability to aide in the future!

Health Savings Account (HSA): An HSA is a tax-advantaged account for individuals with high-deductible health plans. Contributions are tax-deductible, and funds can be used for qualified medical expenses.

YES, HSA’s have an investing portion, these accounts are simply one of those most impressive value adds you can get in your financial plan.

Usage: First you have to have an eligible Health Plan (Benefits article will come out the 1st week of October to explain). Then you will want to contribute what you can, however the max contribution for an individual is $3,850 or double that for a family. So the whole gameplan is to max out your Max out of pocket, so that is on your HSA Card for any issues that may arise, then everything else goes into the investment portion of your HSA. This will continue to grow and be used from medical/retirement purposes! Yes, truly two birds, one stone!

Custodial Account (UTMA/UGMA): Custodial accounts are used to invest on behalf of minors, managed by a custodian until the minor reaches a certain age (usually 18 or 21).

Financial education lacks in our world, why not start your kids on the right foot with an account you can teach them about investments. IF you do not feel like you can do that then that’s what your financial planner is for!

Usage: We use these for Lincoln & Croix, see previous article for more insights, however when they earn money, get bday/xmas cash, we take 50% of that and put it into this account. I then sit with them to teach about investing into companies aka stocks, and we review quarterly.

What Actually Matters!

So, as you can see there are many accounts that can contribute to your wealth generation, however you cannot do any of these if you have no financial plan. I don’t give a shit who tells you that just start putting money away. IF YOU do not have have a financial plan, you will end up hurting your bigger picture, mainly because times will get tough and you will stop “putting money away” and you will withdraw from these accounts potentially cause tax issues!

So, I will leave you with this clip about how Investing is a load of garbage in comparison to having a financial plan.

Next Week’s Issue

I clearly said this term a few times in this article so looks like Issue #53 is going to be about Cash Flow Flexibility!

#NoBSWealth?Clip of The Week

Cannot wait until next week or just want more, check out our podcast @nobswealth and catch us on Youtube . You can always follow me on Instagram and Twitter as well! Or just email me, [email protected] .

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