The news has been consistently reporting the possibility of an economic slowdown, and this potential downfall should be causing a lot of investors to start diversifying their portfolios. You can start by organizing your investments into three different categories: those that are taxed now, later, and rarely or never. Dividing them into groups will help you pinpoint which investments need work, such as recognizing the debt that many people tend to overlook in tax-deffered investments.
- Besides concerning oneself with monies, that which is presently coming in and that which will accrue for retirement, it’s important to pay attention to how various types of money gets taxed.
- There are some types of monies that are taxed right away, such as capital gains, checking and savings accounts and wages.
- Meanwhile, there are monies that are taxed later, such as IRAs, and those rarely if ever taxed like Roth IRAs and health savings accounts.
“If those up-and-down movements make you nervous, it may mean your diversified portfolio isn’t set to a mix that fits with your risk tolerance, and it’s time to talk to your financial professional about making some adjustments.”