What’s the hurry? Financial decisions that can wait

 

From Reuters we get some ideas that can be better if you procrastinate.  Here are some things that get better if you wait.

— Transferring from a traditional individual retirement account to a Roth IRA. When you move money from a tax-deferred IRA to a Roth, you have to pay income taxes on the amount you move. If you do that at mid-career, you’re likely to be paying at a top tax rate, and perhaps even limiting the amount of new money you can invest while you pay taxes.

COMMENT: If you wait until after retiring, you may be in a lower tax bracket.  But there are no guarantees since tax rates are on the rise.

— Buying TIPS. Treasury inflation protected securities … If you wanted to sell TIPS before maturity, you’d get less back than you paid for them.

COMMENT: That’s mostly true because TIPS prices have been bid up to extraordinary levels.

— Buying a fixed annuity.

COMMENT: Rates today are at a record low.  And, by the way, the older you are the higher the income from a fixed annuity.

— Paying off that mortgage

COMMENT: At today’s low, low interest rates you may be able to invest and make a higher rate of return on your money than the interest on your mortgage.  On the other hand, not having a mortgage payment frees up a lot of cash, and many people prefer to know that they, rather than the bank, own their home. 

— Buying the new car.

COMMENT: A car is a depreciating asset.  The writer suggests taking a trip instead, spending money on experiences, instead of things.  Good advice.  At one time, 100,000 miles was the limit for any car.  Today, many cars are good for another 50, 100 or 150,000 more miles.  The time to replace a car is when maintenance costs begin to mount.

 

Wondering what to do and when to do it?  Contact us.

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