Consider Some New Year’s Financial Resolutions

Expert Tips from Billy Chick

As the year winds down, you may
want to look ahead to see which areas of
your life you can improve in 2019.
Perhaps you’ll decide to exercise more,
eat healthier foods, reconnect with old
friends or volunteer at a school or charitable
organization. All these goals are
certainly worthwhile – but you also may
want to add some New Year’s financial
resolutions to your list.

Here are a few ideas to consider:

• Boost contributions to your employer sponsored
retirement plan. Good news!
Contribution limits will be increasing for
many employer-sponsored retirement plans.
For 2019, you can contribute up to
$19,000 (up from $18,500 in 2018), or
$25,000 (up from $24,500 in 2018) if
you’re 50 or older to your 401(k) or similar
employer-sponsored retirement plan. It’s
usually a good idea to contribute as much
as you can afford to your employer’s
plan, as your contributions may lower
your taxable income, while any earnings
growth is tax-deferred. (Keep in mind
that taxes are due upon withdrawal, and
withdrawals prior to age 59½ may be
subject to a 10% IRS penalty.)
At a minimum, put in enough to earn
your employer’s matching contribution, if
one is offered.

• Try to “max out” on your IRA. Even if
you have a 401(k) or similar plan, you can
probably still invest in an IRA. For 2019,
you can put in up to $6,000 in a traditional
or Roth IRA (up from $5,500 in 2018), or
$7,000 (up from $6,500) if you’re 50 or
older. (Income restrictions apply to Roth
IRAs.) Contributions to a traditional IRA
may be tax-deductible, depending on
your income, and any earnings growth
is tax-deferred. Roth IRA contributions
are not deductible, but earnings growth
can be withdrawn tax-free, provided you
don’t start taking withdrawals until you
are 59½ and you’ve had your account at
least five years. You can put most types of
investments – stocks, bonds, mutual funds,
government securities and so on – into
an IRA, so it can expand your options
beyond those offered in your 401(k)
or similar plan.

• Build an emergency fund. Try to
build an emergency fund containing three
to six months’ worth of living expenses,
with the money held in a low-risk, liquid
account. This fund can help you avoid
dipping in to your long-term investments
to pay for unexpected costs, such as a
major car repair.

• Control your debts. Do what you
can to keep your debts under control.
Ultimately, the less you have to spend
on debt payments, the more you can
invest for your future.

• Don’t overreact to financial market
volatility. In 2018 – especially the last
few months of the year – we saw considerable
market volatility, with huge drops
and big gains in rapid succession. What
will 2019 bring? It’s always difficult –
and usually futile – trying to forecast the
market’s performance over the course of
an entire year. But, in any case, try not
to overreact to whatever ups and downs
we may experience. Instead, continue
pursuing an investment strategy that’s
appropriate for your goals, risk tolerance
and time horizon.

Following these suggestions can help
you become a better investor in 2019 –
and beyond.

This article was written by Edward Jones
for use by your local Edward Jones
Financial Advisor.