Barry Bulakites Blogs

Roth and traditional IRAs share a lot of similarities, with the fundamental difference between the two involving the payment of taxes.  Image source:   mymcmedia.org In a traditional IRA, individuals take their contributions out of their pretax income and the investment grows with the incurred taxes deferred until money has been withdrawn.  On the other hand, Roth IRA, which was named after former Senator William Roth who authored the Taxpayer Relief Act of 1997, is funded after an individual’s salary has been taxed. Contributions are not tax deductible and qualified distributions when withdrawing from the account is tax free.  Because of this difference in tax treatment, contributors would have to consider carefully which account to use.  The tax rate is shifting continually. If they believe that the rate would be higher than it is now, they should consider opting for a Roth IRA because future withdrawals are tax free and they would n...

Some employees nearing the age of retirement start to really think about the future. The first thing that comes to mind is what to do after retiring. A close second is if they have the means to do what they want to do. Image source: madailylife.com Retirement should be prepared for. In the past, retirees could depend on 401ks as their employers offered retirement benefits that could hold them until old age. However, with the inflation rate of the past decades and increase in taxes, it seems that retirees would hardly survive on a 401k. It’s a good thing there are alternative investments. For this article, we’ll focus on index and municipal bonds and their key differences. Index funds are quite popular among investors. They have amazing tax advantages and don’t require that huge a capital compare to other alternative investments. Index funds also allow investors to incorporate a buy-and-hold strategy, which makes them safer than most. They also have a ...

More conservative investors will normally use certificates of deposit or CDs. This should not come as a surprise to seasoned investors and finance experts since CDs are well-known for being safer than other investment options. CDs are also not connected to the stock market, which means the risk is incredibly low. However, critics of CDs argue that the investment causes investors to lose money because of inflation and taxation. The harsh truth is that over the past seven years, the average six-month CD rate has never exceeded 1 percent. Also for the past seven years, CDs have never yielded a positive “real” return. Image source: blogspot.com As with all investments, doing a bit of research goes a long way. With a bit of calculation, investors can see just how much they stand to lose (in terms of purchasing power) when they invest in CDs, especially when they consider the effect of inflation and taxes. A lot of banks never discuss these hard facts with investo...

Individual retirement accounts, or IRAs, are essentially savings plans. People set up IRAs to defer paying taxes on earnings as their savings continue to grow until they decide to withdraw the money. Remember that there are different types of IRAs, each with its own tax eligibility and tax implication as established by the IRS. Image source: investopedia.com Having an IRA has many advantages. A traditional one, for example, will allow you to claim a tax deduction when you contribute to it. It helps reduce your taxable income, as you don’t pay income tax for the money you’ve put on there. Also, as your savings grow, they continue to be tax-deferred. In short, there’s no need to include any of your dividends, capital gains, and interests when computing your annual tax return. The first step in setting up your IRA is to decide on which IRA type best suits your needs. You should study closely if a traditional IRA or, say, a Roth, is what you need. You then will h...

Tax planning is widely known to be the manner of forecasting one’s tax liability and creating ways and methods to reduce it. This involves analyzing one’s financial situation from a tax perspective, with the goal of tax efficiency. Here are some steps for businesses to perform this crucial exercise in financial planning.  Image source: Pinterest.com        Start early : The tendency for most people is to do taxes in March or April when the deadline for settling tax returns is already looming near. Start earlier to have more time to estimate one’s investment gains and losses, as well as income.  C alculate tax liability : Know these liabilities and work toward them. This need not be a difficult thing to do if one has a relatively fixed income and salaried employees. Engage the services of a tax expert if you find yourself in the dark when it comes to computations.  Profile risk level : Here, find a good level of investment ris...

When it comes to IRA assets, investors must make sure that they are investing their money profitably and legally. To prevent prohibited transactions, especially with self-directed IRAs, those who are saving up for their retirement years must be on the lookout for fraudulent offers. Those who are aiming for a self-directed IRA should act accordingly:  Image source: Military.com 1. Avoid investing in prohibited investments. An IRA cannot be invested in collectibles (art, antiques, gems, etc.), precious metals, and life insurance. When a broker approaches a potential investor to direct their IRA through these means, it is a fraudulent deal.  2. Ask questions and check the broker's credentials. Setting up a self-directed IRA can be tricky for those who will be doing it for the first time. Before investing in assets, there should be a lot of questions. Factors such as valuation, liquidation, and distribution might determine if it's worthwhile to invest. ...

As a person begins to earn money, he or she could be thinking of either earning more or saving more. For years, the argument about whether one should earn more or save more to become financial independent has ruled the minds of those in the workforce.  Image source: abi.org.uk On the one hand, the "earn more" side suggests that the best manner to experience financial freedom is by having a larger income. If one is an entrepreneur, there is no upper limit to this idea. On the other hand, the "save more" team tells individuals that saving more and spending less is the most sufficient way to become financially independent. The statement that one would spend more if one earns more is based on behavior and mindset; its counter-statement says that it is easier to save as one earns more is focused on math and logic. As both are correct, this debate shall be put to rest as people must only focus on widening the gap between income and spending.  To be f...