It’s time for another of our Ask a Houston Bookkeeper series. The Dow Jones industrial average grew to a historic 23,000 today. It is the first time the index closed below a 1,000 point milestone it hit on the same day since it was at 16,000. With all this capital being created with more on the way, what’s the Average Joe to do? We’ll give you 5 must read tips now that the dow is at 23,000 below.
1. Know the Limits
You are allowed $5,500 in total contributions to all of your traditional / Roth IRAs for 2017. The number is $6,500 if you are aged 50 or older. These numbers do not apply to rollover contributions or qualified reservist repayments. In short, if you haven’t invested it all yet, plan to do so by the end of the year. This includes making contributions to your employer funded retirement account, your own personal account or any other investment. We advise you use every penny of this deduction, and don’t be afraid to invest more if you can.
2. Allocate Your Funds
We understand you don’t just have $5,500 lying around, but there are ways to come up with it. A few include.
- Read amazing blogs on how to save money in your day to day activities.
- Sell items you no longer need on Amazon, eBay, Craigslist, NextDoor, etc.
- Spend less. Not only will the money you invest now be worth so much more later down the line, you also avoid the oh-so-high price tag that comes with the credit card interest.
- Cash in those gift cards. They are lying around going to waste. Spend them on items you would buy anyway. If that’s not possible, sell them to a friend, neighbor, or to an online site like Gift Card Granny.
3. Read, Read, Read.
Don’t just throw money into your accounts without thinking. Do a little reading and see what works for you. Stocks, mutual funds, and exchange traded funds (ETFs) all make good choices. They aren’t all created equal, so be sure and do what is right for you. Keep your current age verses your desired retirement age in mind when calculating these. With this information in mind, make a list of investments you are interested in.
4. Narrow it Down
Once you have a symbol or ten you are interested in, do a little comparison. TD Ameritrade and other websites offer great tools where you can compare symbols against similar ones. Tools like these can let you see your choices side by side. Symbols can also be inputted to give you similar – and at times – superior choices. They can tell you their performance, average rate of return, Morningstar Rating, Morningstar Return, net expenses ratio, average market cap, etc.
5. Choose and Relax
Now you know what you want to invest in, do it. We highly recommend spreading your capital around, even if you are investing in mutual funds or ETFs. Make your purchases, then relax. Checking your funds every day can be easy and tempting. Doing so may cause you to panic without cause. You can check every week or month. Don’t make decisions right away as one bad month isn’t enough to go on. If your work or financial manager is available, talk to them about what you would like to do before pulling the trigger.
Houston Bookkeeper & More on Must Read Tips Now That the Dow is at 23,000
If you need bookkeeping to help keep up with your finances, feel free to contact us for to learn more on how we can help.
