With stock market performance plummeting, it can be easy to get discouraged about investing. There are, however, a few thoughts to the declining stock market that should be considered.
According to Morris Peacock, HintonBurdick CPAs & Advisors Managing Partner, “One advantage to the declining market is to continue buying stock using dollar-cost averaging. If you invest the same amount into the stock market each month, regardless of the stock market performance, you will come out ahead in the long run. This works because you are purchasing more shares of stock when prices are low and you are disciplining yourself to invest continually, avoiding the temptation to try and time the market.”
Another strategy is rolling retirement funds into a Roth IRA. Income taxes are paid on the value of the IRA or other funds transferred into the Roth on the date of the rollover. The lower the value of the assets in your IRA, the lower the taxes you have to pay. Once you have transferred the funds into a Roth IRA, their growth and future distributions are tax-free as long as you follow the rules. Peacock suggests, "There are a few considerations in determining if it will be better to convert to a Roth. These considerations include how long it will be until you retire, the expected rate of return on your investments, your current tax bracket and projected tax bracket at retirement, and if you have funds available that are not in your retirement asset to pay the taxes."
Learning how to make the stock market work for you is one of the keys to future wealth. If you have further questions, or would like to discuss rollover and other retirement options, please feel free to contact the HintonBurdick CPA’s & Advisors office at 435-628-3663. Visit their website at www.hintonburdick.com for weekly tax tips.
