What To Do With Lump Sum Pension Payout

What To Do With Lump Sum Pension Payout

I’m about to get $130,000 from a lump-sum pension payout, but I don’t know what to do with it

By Beth PinskerFollow

A reader wants to know the best way to invest a lump sum of money to have it last through retirement

Got a question about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money?

Dear Fix My Portfolio,   I am about to receive a lump-sum payout from a pension plan I was in. It’s around $130,000. Need some advice on the best way to invest this money. I am turning 60 in April and don’t have a 401(k) or IRA plan.      Stephen in Connecticut

Dear Stephen,

It’s great that you’re asking what to do about moving around a major sum of money before it actually happens. So many people move the money first and ask questions later, which can cost you quite a bit in taxes and lost gain.

“I cannot tell you how many calls and inquiries I have received after an investor has made an incorrect rollover decision or unadvisable Roth conversion decisions, incurred huge tax liabilities, or caused their Medicare premiums to be double what they might otherwise be, and then called me to ask for help after the damage was done,” says Eric Amzalag, a financial planner and owner of Peak Financial Planning in Woodland Hills, Calif.

If $130,000 is going to be the majority of your nest egg for retirement, then you most likely want to do a direct rollover to an IRA account and never touch the money yourself. Your pension plan should be able to send the money directly to wherever you set up an account — most major financial institutions should have an option for you to open a rollover IRA account — and then you won’t owe tax until you take out distributions.

If the money comes to you in the form of a check and then you deposit it into an IRA account within 60 days of the distribution, you can likely defer the tax. But the timing can be tricky, and if you miss your window, you’ll owe the IRS income tax on the full amount.

Your investment choices

To continue reading, please go to the original article here:

https://www.marketwatch.com/story/im-about-to-get-130-000-from-a-lump-sum-pension-payout-but-i-dont-know-what-to-do-with-it-11674449759?siteid=yhoof2

The Similarities Between Fitness and Personal Finance

The Similarities Between Fitness and Personal Finance

December 20, 2021  Financial Pilgrimage

What do physical fitness and personal finance have in common? On the surface, there are a lot of differences between your fitness program and financial wellness. One involves income, spending, saving, and investing. The other involves physical activity, nutrition, and overall health. The reality is that financial fitness (and just fitness) are some of the most critical areas of our lives. It’s no coincidence that there are striking similarities between fitness and finance once you start digging in.

Financial Fitness is Behavioral

Fitness programs have always been a big part of my life. So when referring to fitness, we’ll be talking about both sides of the equation, including physical activity and nutrition. Being raised by a dietitian and having a love of sports had me interested in both early on. Looking back, I feel fortunate to have built habits in both areas at a relatively young age.

Growing up in a house with two younger brothers and a junk food-loving dad, the competition for unhealthy food was fierce. My mom would go grocery shopping every ten days, and the one bag of chips or package of cookies would be gone within a day, sometimes minutes. That would leave us with nothing but rice cakes, fruits and veggies, and other healthy options for the rest of the week and a half. It was rough.

We had home-cooked meals that consisted of protein, carbs, and vegetables most nights. But, as I got older, I realized that having home-cooked meals was a rarity compared to other households.

We’d still get fast food on occasion. My dad was a fast-food manager, after all. With three kids in the house, sometimes the easy thing was to bring home a big bag of burgers and fries so we could eat and then make our way to evening activities. This taught me that one of the most critical nutrition lessons is “everything in moderation.” Eating fast food, sweets, or potato chips is fine on occasion as long as most of what you put into your body is more on the healthy side.

Whenever a new diet fad becomes popular, I’ll ask my mom about it to get her thoughts. Usually, she rolls her eyes. Over the years, there have been so many diet fads—Atkins, Paleo, Intermittent Fasting, Mediterranean, South Beach, and on and on. Almost everyone will swear by one of these diets and back it by “science.” I understand that some diets result from personal beliefs or food allergies. However, most people latch onto these fad diets, stick with them for a while, and then end up right back where they started. We’ll hit on this topic more below.

Personal Finance is Personal – So Is Fitness

When attending FinCon, a conference for personal finance nerds like me, the theme was “personal finance is personal.” This statement means that everyone’s situation is different. It’s one of the reasons why I believe there are so many personal finance bloggers as we all connect to other people in different ways. What I’ve learned through personal finance is that if you want to change your behavior, you have to change your habits.

Financial and fitness programs are behavioral, and they’re personal. Hopefully, this blog post resonates with some people, but it can’t be relatable to everyone. So all I can do is tell my story and share the experiences I’ve learned over my lifetime with the hope that it makes an impact.

We have a deep emotional connection to both food and money. For example, I know when I’m stressed and tired, that’s when I tend to stuff my face with junk food or drink alcohol. Similarly, others may practice “retail therapy” and take it to the malls to run up their credit card bills. It’s a vicious cycle that hits us in our weakest moments. So how do we change our habits? I’m not sure, but maybe understanding the similarities between fitness and financial wellbeing will be helpful.

To continue reading, please go to the original article here:

https://financialpilgrimage.com/fitness-and-personal-finance/

How to Create Wealth during a Recession

How to Create Wealth during a Recession

By  Financial Imaginer

There’s no time like the present to create wealth. Most wealthy people know that it’s during difficult times when possibilities for building wealth abound. So if you’re looking to create some serious financial stability for yourself and your loved ones, don’t wait – don’t let this crisis go to waste – start now. Learn how to create wealth during a recession with the following 8 tips.

1. Never let a Crisis go to Waste.

When it comes to creating wealth, there’s no such thing as a bad time – only good opportunities disguised as bad times. So instead of being afraid of a recession, use it as an opportunity to create wealth. Change your goggles, instead of using your fear glasses, look for opportunities!

2. Get Creative with Your Investments

Wealth creation is all about thinking outside the box. If you want to create wealth during a recession, you have to be creative and think differently than “the rest of us“.

The building blocks of your [financial] life.

But don’t worry, there are plenty of ways to create wealth without putting your life savings at risk. For example, you could start a business or invest in real estate, another way is by investing in distressed assets. This could be anything from a house that’s in foreclosure to a business that’s about to go bankrupt. Of course, you need to be careful with these kinds of investments, but if you do your homework, you could see some serious opportunities during a recession.

You can also get creative with more traditional investments, like stocks and bonds. For example, you could invest in companies that are doing well despite the recession. The high percentage of passive investing results in more generic sell-offs of everything and stock pickers might find stocks at undeservedly low levels.

Another option is to start your own business. Many people lose their jobs during a recession, but if you have an entrepreneurial spirit, this could be the perfect time to turn your ideas into reality and pivor into a new life altogether. There are many resources available to help you get started, so there’s no excuse not to at least try.

What’s the worst that could happen?

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/how-to-create-wealth-during-a-recession/

Crash at Mad Wallstreet

Crash at Mad Wallstreet

By Financial Imaginer

In the late 1990’s we used to go to a club called “Mad Wallstreet” in central Switzerland. It was the club everyone loved to go to, and it had a really cool feature: Prices for drinks used to be shown like stock market tickers. They fluctuated in line with demand, the general mood on the dance floor and it played with our emotions. We learned how to take advantage of a market crash!

The more people ordered drinks, the higher the prices would go. If at one point demand started to fade away, the guys behind the counter would initiate a stock market crash. Whenever that happened, all the drinks from simple beers to cocktails and shots would suddenly be incredibly cheap and the crowd would cheer!

We were usually in the best mood when prices crashed as it meant a round of new drinks for everyone! We loved the excitement of that place but hated when prices were at all-time highs.

Never let a Good Crisis go to Waste

Recently, while reminiscing about these memories I asked myself:

Why are we not the same when the stock market crashes?

Instead of panic selling, we should be panic buying!

If the stock market dips, it should be like a discount offer in the supermarket. If there’s even an actual stock market crash, we should look at it like a “Black Friday Sale”.

Stock market crashes don’t happen every year, there are just a few opportunities like this in your life.

Never let a good crisis go to waste.

A crisis offers the opportunity to do things you couldn’t do before.

How come so few of us like to buy and invest on such occasions?

It’s a question of how you are prepared. Your mindset, who you surround yourself with, and whether or not you have a plan define your actions.

How to Prepare for a Crash?

The very best thing to do is to always be prepared for one.

You don’t want to be in a situation where you might be forced to sell your assets at panic prices.

You do want to be prepared to take advantage of such a situation!

To be prepared, have a plan!

Keep some cash on hand, have a buying list or a rebalancing plan for your portfolio ready in the drawer. When the dip or crash happens, follow through with your plan. Buy more stocks with your cash or rebalance your portfolio towards more risk.

Warren Buffett always keeps a potential buying list in his drawer. He starts by identifying what value he sees in certain companies and then decides at which price he would be interested to buy.

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.”  Warren Buffett

If you are prepared for a stock market crash, you will appreciate them coming.

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/crash-at-mad-wallstreet/

Playing the Game of Life: Comparing Life to Video Games

Playing the Game of Life: Comparing Life to Video Games

5. November 2022  Financial Imaginer

In life, we all want to win. We all want to achieve our goals and be successful. But what does it take to win the game of life? In this blog post, we will explore the concept of how to play the game of life like a video game!

Just like in video games, in life, you can become whoever you want to be, look however you want, and upgrade yourself as you see fit. The beauty of playing video games is that you can play as many lives as you want, and enter into as many different worlds as you please. In real life, you just got 1 Up!

“Video game players are artists who create their own reality within the game.”

― Shigeru Miyamoto

Who says you can’t do so in your own life?

Take a break, watch and listen to this awesome track! Have fun and let’s gooo!

Start thinking of life as a game – you’ll become fearless and start leveling up!

Join me [financially] imagineering your own life!

Are you Ready Player One?

“My friend Kira always said that life is like an extremely difficult, horribly unbalanced videogame. When you’re born, you’re given a randomly generated character, with a randomly determined name, race, face, and social class. Your body is your avatar, and you spawn in a random geographic location, at a random moment in human history, surrounded by a random group of people, and then you have to try to survive for as long as you can. Sometimes the game might seem easy. Even fun.

Other times it might be so difficult you want to give up and quit. But unfortunately, in this game you only get one life. When your body grows too hungry or thirsty or ill or injured or old, your health meter runs out and then it’s Game Over. Some people play the game for a hundred years without ever figuring out that it’s a game, or that there is a way to win it. To win the videogame of life, you just have to try to make the experience of being forced to play it as pleasant as possible, for yourself, and for all of the other players you encounter in your travels. Kira says that if everyone played the game to win, it’d be a lot more fun for everyone.”

― Anorak’s Almanac, Chapter 77, Verses 11-20, Ready Player One

Let's play the game of life like a video game!

The Game of Life – Level 1: The Trial Run

To win the game of life, you must level up. Just like in any video game, to progress to the next level, you must complete certain tasks and challenges and grow stronger with experience.

Level 1: Let's go!

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/the-game-of-life/

12 Life-Changing Millionaire Lessons I Learned From Working with the World’s Richest People

12 Life-Changing Millionaire Lessons I Learned From Working with the World’s Richest People

December 10 2022 Financial Imaginer

Over the years, I’ve had the opportunity to meet hundreds of millionaires and learn valuable millionaire life lessons from them first-hand on and off my job as their wealth manager. While their backgrounds, lifestyles, and fortunes vary greatly, there are some common traits that all millionaires seem to share.

In this blog post, I will share with you 12 life-changing millionaire lessons that I’ve learned from the world’s richest people.  My goal in sharing these lessons is to “inspire” and help you become the best version of yourself and build a path to financial freedom!

Let’s get started:

1. Investing in Personal Growth:

All millionaires invest heavily in themselves and their personal growth. They understand that growing as a person is a foundation for becoming wealthy and successful. Most wealthy people I’ve come across read a lot, meet with others more often, and usually have found ways how to satisfy their interest in many things to grow.

There is no more profitable investment than investing in yourself.

They invest time, money, and effort in their personal growth continuously.

2. Working Harder and Smarter Than the Average:

Successful millionaires usually work much harder, smarter (!) and longer than average people. This doesn’t mean that they sacrifice their time with family and friends or their health, but rather this is how they structure their life — to get more done in less time.

They don’t work for money and status, but to unlock more time and freedom.

A dream does not become reality through magic; it takes sweat, determination, and hard work.

They understand that hard and mostly smart work will take them further faster while they still maintain balance in their lives. They’ve learned to be very efficient, delegate, and automate as much as possible in their doings and focus on where they are needed the most: Putting the rubber on the ground.

3. Taking Bigger Risks:

The Millionaires I’ve served have developed skills to differentiate between good and bad risks. They understand risks are part of life and are not scared of them. They know that taking risks can open up new opportunities for them.

The biggest risk is not taking any risk.

Wealthy people know when to walk away from an investment or situation if it is no longer beneficial. They are smart in calculating their chances and setting themselves up with the right team around them. Success is about smart risk management, not about wild risk-taking.

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/12-life-changing-millionaire-lessons-i-learned-from-working-with-the-worlds-richest-people/

I Received a Sizable Inheritance How Should I Invest It?

I Received a Sizable Inheritance How Should I Invest It?

Lee Huffman   Wed, January 18  2023

When a loved one passes away, you may receive an inheritance. This money is a token of the person’s appreciation for you and often represents a lifetime of savings. When you’ve received a large sum of money, there is a temptation to splurge on dream vacations, shopping and other fancy items. While it may be okay to spend a portion of it that way, the best option is to save and invest the money for your future. Here’s how to invest your inheritance to become set for life. A financial advisor can give you valuable guidance on how to make the best use of an inheritance.

Six Ways to Invest Your Inheritance

There are almost infinite options to invest a large sum of money from an inheritance. The options that you choose will largely be determined by how much of an inheritance that you’ve received, your current financial position and what your goals are. The following six possibilities are some of our best tips to create lifelong wealth for you and future generations.

Contribute to an IRA

Many people wish that they could contribute to an individual retirement account (IRA) each year, but daily bills often get in the way. With an inheritance, this is your opportunity to contribute to your IRA. The maximum contribution for 2021 is $6,000 per person ($7,000 if you’re 50 or older). If you have a spouse, you can also contribute to their IRA, even if they’re not working.

There are two different types of IRAs to choose from, traditional or Roth. Traditional IRAs offer a tax deduction today, but withdrawals will be taxed in retirement. If you have a workplace retirement account, income limitations apply. Roth IRAs are a popular choice because they provide tax-free withdrawals in retirement and there are no required minimum distributions as you get older. Just keep in mind that you don’t get a tax deduction for the contribution and there are income limits for high earners.

Max Out Your Company Retirement Plan

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/received-sizable-inheritance-invest-140047891.html?fr=sycsrp_catchall

Someone Stole My Inheritance. What Are My Options?

Someone Stole My Inheritance. What Are My Options?

Rebecca Lake   Wed, January 18, 2023

Receiving an inheritance could provide an unexpected (or anticipated) financial windfall. There’s just one thing you may have to contend with – people attempting to steal what you’ve inherited. Inheritance theft is sometimes a very real problem for people who inherit money, property or other assets. Inheritance theft laws exist to protect heirs and beneficiaries. If you’re set to receive an inheritance or have received one that was stolen from you, it’s important to understand what legal rights you may have for getting those assets back. A financial advisor can help you with estate planning to minimize conflicts after your death.

What Is Considered Inheritance Theft?

Inheritance theft can take different forms, with some being more obvious and others being more subtle. Some common examples of inheritance theft or inheritance hijacking include:

An executor of a will who steals or attempts to hide assets from the estate inventory

A trustee who diverts assets from a trust for their own use or benefit

Executors or trustees who charge excessive fees for their services

Abuse of power of attorney status

Use of coercion or undue influence to force a will-maker or trust grantor to change the terms of their will or trust

Fraud or forgery related to the will or trust document or the destruction of said documents

Inheritance theft can also happen on a more personal level. Say you and your sister share caregiving duties for your aging mother. Your sister has access to your mother’s bank accounts and without your knowledge, withdraws a large amount of cash from them while your mother is still living.

Meanwhile, your mother names you as executor of her will. Once she passes away, you begin creating an inventory of her assets only to discover that money is missing from her bank accounts. If you and your sister were supposed to have inherited those assets jointly, this could constitute a violation of your state’s inheritance theft laws.

Is Stealing Inheritance a Crime?

People who commit inheritance theft, whether it’s an executor, trustee, beneficiary or someone else, may be subject to both criminal and civil penalties. For example, a trustee who embezzles money from someone’s estate can be charged with a felony or misdemeanor, depending on state laws. They can also be sued by the beneficiaries of the trust for breach of fiduciary duty.

Likewise, a caregiver who steals money from someone’s bank accounts or coerces them into signing over other assets could be charged with a felony or misdemeanor crime. Typically, whether a felony or misdemeanor charge is brought depends on the nature of the theft and the value of what was stolen. Felony convictions can result in a prison sentence while the punishment for misdemeanor convictions is typically jail time and/or fines.

 To continue reading, please go to the original article here:

https://finance.yahoo.com/news/someone-stole-inheritance-options-140024441.html?fr=sycsrp_catchall

What Income Level Is Considered Rich?

What Income Level Is Considered Rich?

Rebecca Lake  Tue, January 17, 2023

Earning more money can make it easier to pay the bills, fund your financial goals and spend on hobbies or “fun,” but what income is considered to make you rich? The answer can depend on several factors, including where you live, what type of job you have, how much you save or invest and how you typically spend your money. If you’re looking for help to reach your financial goals and be considered “rich” in your own eyes then consider building a plan and working with a financial advisor.

What Income Is Considered Rich?

Pinning down an exact income level that qualifies you as “rich” is difficult, as there are numerous studies and surveys that attempt to measure it. To keep things simple, let’s consider where the Internal Revenue Service (IRS) sets the bar for the top 1% of earners first.

According to the most recent data available for fiscal year 2019, an income of $540,009 per year puts you in the top 1% category. Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you’re in the top 1% if you earn $819,324 or more each year. The top 5% of income earners make $335,891 per year.

What Is a Rich Monthly Income?

The amount of money you need to make each month to be rich depends on which metric you’re using. If you’re going by the IRS standard, then you’d need to make approximately $45,000 a month to be rich. On the other hand, if you’re aiming for the top 1% as measured by the EPI, you’d need a monthly income of $68,277.

To reach that level of income, you’ll likely need to have something more than the typical 9-to-5 job. Examples of people with monthly incomes in that range can include successful business owners, celebrities, athletes and online influencers or content creators.

How Much Income Do You Need to Be in the Top 20%?

 To continue reading, please go to the original article here:

https://finance.yahoo.com/news/income-level-considered-rich-140003986.html

Knowing Your (Net) Worth

Knowing Your (Net) Worth

ZachP  Dec 30, 2022  THE SYTCH

Keeping track of your net worth is equivalent to having an annual checkup with the doctor that includes bloodwork.  Getting the annual doctor checkup may not be necessary, but if you want to optimize your health as you age, it is vital.  How do you avoid high blood pressure becoming a major issue?  Identify it as early as possible and treat it.  The same goes for many other ailments or conditions as you age, such as issues with your sugar levels.

Think of tracking your net worth like the annual doctor checkup.  It may not be a necessary step to achieve financial success for some, but if you want to get nerdy with your finances and optimize every dollar, tracking your net worth is a must.  Knowing your net worth every year requires you to do a deep dive into your finances. This forces you to diagnose any issues you are having.

Getting started with anything in life is one of the hardest parts.  New information is scary.  If you keep a general track on the numbers in your checking and savings account, you may have an idea where you stand financially.  But you are keeping your relationship with your finances at arm’s length.  To get a real grip on your financial health and your future, you must have an intimate relationship with every dollar to your name. No, do not name each dollar bill, but feel free to nickname them

What Does “Net Worth” Mean?

The simplest way to explain your net worth is to implement the following formula.  Assets minus liabilities = net worth.  In other words, your net worth is how much cash you would have if you were able to liquidate your major assets, minus your debts.  There are many sources out there that walk you through what to include in your asset column and what to consider as part of your liabilities.  Personally, we use this tool to keep track of our net worth.  There are many free resources out there as well (such as this post).

No matter the method you choose, please make sure to do three things immediately:

Start today.

Do it again once every year moving forward (I have read how some people track it weekly.  I am not a fan of this, but if that is what it takes for you to stay financially fit, do it!)

Compare your net worth to previous years and see if there is anything you need to change.

If you can manage to do these three things moving forward, you will undoubtedly become financially fit.

How To Calculate Net Worth?

You will first want to figure out what to include in your “asset” column.  The major assets I include are cash, investments (tax free, tax deferred, and after-tax), business interests, and property.  I will go through each in turn.

 To continue reading, please go to the original article here:

https://www.thesytch.com/post/14-knowing-your-net-worth?fbclid=IwAR0B_YrUfcrNKwgp3CIs-RfrYcN4G7B9c3gXw_tWl9d_xFIzv6WAMDeGWT4

4 Common Fears About Money To Overcome

4 Common Fears About Money To Overcome

Heather Taylor   Tue, January 17, 2023

Most people share certain types of financial fears in common. Some will be able to overcome these fears with support, but others will let fear rule the rest of their lives. Leading a life where financial fears take top priority can keep you trapped in an unhealthy financial mindset. It can even lead to losing money throughout your lifetime.

Even if you feel scared to do it, it is possible to break the cycle and develop a healthy financial attitude where money is viewed as a tool that can help, not hinder, you. Here are some of the most common financial fears and what it takes to overcome each one.

Fear of Going Broke

Let’s start with one of the most common financial fears: going broke or even bankrupt.

This is often a learned money belief or habit, said Chloe Elise, certified financial coach and CEO of Deeper Than Money. Typically, the person who holds this fear has observed it from their parents or grandparents.

“They look at money as always being scarce, and they fear they will run out,” Elise said.

While this belief can be extremely difficult to break, the ultimate goal is to view money through an abundance mentality. Elise said some of her clients adopt the mantra “money flows to me” as a way to start welcoming money into their lives.

It takes more than a mantra though! To start welcoming money into your life is to watch your money work for you. Elise’s favorite recommendation for doing this is to keep your emergency fund in a high-yield savings account.

“With total liquidity and no risk, a HYSA is an incredible way to begin to see interest accumulate on your account by doing nothing,” said Elise, who adds that as of right now interest rates are over 3%.

Once you do this, Elise said you can start to look into other investments, like retirement accounts or real estate. This eases the fear of stepping outside of your comfort zone and increases the likelihood you will be rewarded.

Fear of Checking Your Bank Account

Who among us has indulged in an expensive weekend out, or a week-long vacation, and then felt paralyzed with fear about what their bank account will look like in the aftermath of these pending transactions?

Here’s what happens when you don’t check your bank account today. You’re not likely to check it tomorrow or the day after.

 To continue reading, please go to the original article here:

https://finance.yahoo.com/news/4-common-fears-money-overcome-160015068.html?fr=sycsrp_catchall

9 Steps To Become A Millionaire in 2023

https://www.youtube.com/watch?v=pmIhDENqbfc