BY ROB SNELL
Jan. 29 is National Puzzle Day, with puzzle celebrations
and events taking place at museums, libraries
and other venues across the country.
Why this date was chosen–or why National
Puzzle Day even exists–is something of a mystery.
But as an investor, you can find value in the concept
of a puzzle, specifically, in putting together the pieces
of your financial puzzle.
What are these pieces? Here are the essential ones:
At different times in your life, you will have
various goals – purchasing a first or second home,
sending your children to college, enjoying a comfortable
retirement, and so on. While these goals
are diverse, they all have one thing in common: To
achieve them, you’ll need some growth potential in
your investment portfolio. The nature and the extent
of the growth-oriented vehicles, such as stocks and
stock-based instruments, in your holdings will depend
on your specific goals, risk tolerance and time
horizon – but growth opportunities you must have.
Income-producing investments, such as bonds
and dividend-paying stocks, can help supplement
your earned income during your working years
and provide you with a valuable income stream
when you’re retired. Plus, bonds and other incomeproducers
can help balance a portfolio that might
otherwise be too heavy in growth vehicles – which,
as you know, are typically higher in risk.
Taxes will always be part of the investment
equation. Whenever possible, you’ll want to take
advantage of those accounts that let you make
tax-deductible contributions and that provide the
opportunity for tax-deferred growth, such as a
traditional IRA and your 401(k) or other employersponsored
retirement plan. You may also find that
you can benefit from tax-free investments, such as
some types of municipal bonds and a Roth IRA.
(Your Roth IRA contributions are not tax-deductible,
but your earnings grow tax free, provided you’ve had
your account at least five years and you don’t start
taking withdrawals until you reach 59½.)
You can’t just invest for your future. You also have
to protect it. If something were to happen to you,
would your family be able to remain in your home?
Would your children still be able to go to college? To
help ensure continuity and security in your family’s
lives, you’ll need to maintain adequate life and disability
Also, you will need to protect your independence
in your retirement years, as you no doubt would
want to avoid burdening your grown children with
any financial burden. To attain this type of freedom,
you may have to guard against the potentially catastrophic
costs of long-term care, such as an extended
nursing home stay. A financial professional can suggest
ways of meeting these expenses.
After working hard your whole life, you’d probably
like to leave something behind to your children,
grandchildren, other family members and possibly
even charitable institutions. To create the legacy
you desire, you will need to create a comprehensive
estate plan. Because such a plan may involve a will,
living trust and other complex legal documents, you
will need to work with your legal and tax advisors.
Try to put these pieces together to help complete
your financial “puzzle” – when you do, you may well
like the picture that emerges.
Snell is a financial advisor with Edward Jones
Financial in Saratoga Springs.