What's The Most Important Investment Element?

hey everyone the lesson here for money evolution in today's video I'm gonna be talking about

what

is the

most

important

investment

element

actually

what

I'm going to be doing in this video is kind of debunking a couple of common myths that might be out there so if you ask people you know if you're looking at

investment

s

what

are some of the common things that we should be looking at you know and some people you know might say fees you know so a lot that's a lot of talk right

now hey you should have the

investment

s that have the absolute lowest fees another one obviously is going to be the return you know so

what

is the return of that particular

investment

in it well fees and return are certainly things that you want to consider as you're putting together your portfolio there's actually five other additional things that I want to talk about here today that I think could actually have even more impact on your net results for for your investing for your

retirement for your taxes so let's dive right in so number one is looking at taxes and and so a lot of people don't really put a lot of thought into how their

investment

s are taxed either how they're taxed today how their tax down the road in retirement now this is something that's been a pretty common theme here on the YouTube channel I've talked a lot about planning for retirement having a tax plan but I think this is something that often times gets really overlooked you

know so if we think about taxes here we've got essentially three buckets here we have

what

we sometimes recall is our non-retirement bucket so those are things that are not part of any type of retirement plan and remember we have to pay taxes on that money every year on an annual basis and we do have a couple of preferential tax items there we've got long-term capital gains we have ordinary dividends those are both taxed for

most

of us at a fifteen percent maximum tax rate if you're

in one of those higher tax brackets or the highest tax bracket I should say that's going to be 20 percent plus you're getting hit with that Medicare surtax and things like that but for

most

of us unless we're in that highest tax bracket 15 percent but we also have short term capital gains and we have interest and so as we're putting together a portfolio we don't oftentimes think about that and we don't oftentimes have control over the interest or the short-term capital

gains and just to refresh there that's text at your ordinary income tax rate and so that is going to be at your highest marginal tax bracket and depending on

what

that is it could be 22 24 33 percent or more if you're in one of those higher tax brackets so so we want to think about that and how we balance out the portfolio where we put that you have your traditional bucket and that's one that we've talked about as I think a lot of people tend to put

most

of their retirement

savings in that but remember that is also

what

we call the text later bucket okay and so that is going to be taxed as you pull that money out in retirement and whether you want to or not at 70 and a half you have to start taking

what

are called mandatory distributions or RMDs and for a lot of people as we do financial planning for individuals we find that when we map this stuff out we find that people oftentimes they're in a higher tax bracket in retirement because of those RMDs than they

were even while they were working you know so that's something that you definitely want to to think about there and then the last one is the Roth bucket and so that's basically you pay the tax as it goes in and you don't pay any taxes as it comes out as long as it's a qualified distribution which is in retirement you know it has to there's some rules too it has to be in there for at least five years and then you have to be over age fifty nine and a half to be able to take

that out penalty free so again so when we look at this for individuals you want to think about your taxes because you know again you know saving a couple of basis points like basis points are a fraction of a percent but saving a couple of basis points on your fee is al

most

meaningless if you're saving your money in the wrong area here so I want you to think about that that's one of those those things number two is your investor behavior and so I think a big part of

what

we do here as a

financial adviser is helping clients kind of manage the amount of risk that they're taking within their portfolio and kind of tempering that because a lot of times you know we're watching the news our clients are watching news they hear things going on inverted yield curve that means there's a recession coming we got a lot of calls recently about that and so clients want to ascend in a sense kind of panic and do something a little bit more irrational with their portfolio maybe

selling out at the wrong time and so you know we want to look at you know

what

is that behavior and and keep yourself in check if you're the one that's managing your own

investment

s or have a financial advisor that gets you and understands

what

it is that you're trying to accomplish and helps you keep on the right path here with

what

the behavior that you have the other one we want to look at is how much you should be saving and that's something we've talked about a lot and

we in fact have a whole video series that we have I'll do a little plug here but for our Resource Center we have a whole creating your retirement vision workshop it's for videos we take a really deep dive on this but a lot of times we get one of two things happening either people aren't saving enough money for their retirement or they're saving too much you said well how can you save too much you know well saving too much for a retirement really kind of sacrifices that lifestyle

that you have today because you're putting so much emphasis on the future that you're foregoing and it's in and try to save money today and you're not doing some of the things that maybe you'd like to be doing so we want to create that vision and we really want to figure out

what

what

it is that you want that retirement to look like and make sure that you're not saving too much or that you're saving enough money and then we also want to look at as we're going

forward is cash flow and so cash flow is something that is the basis for the financial planning that we do something that I think regardless of your age or how much time you have to retire this is something that's going to be very valuable for you but especially for those of you that are coming up very close to retirement or in retirement understanding that cash flow is going to be absolutely critical because understanding

what

those negative cash flows in particular are going to be are

going to be

what

's going to dictate how much money you're going to need to take from those retirement accounts and again that's going to go back and that's going to affect your tax situation it's going to affect the ability for you to sustain that over a long period of time but understanding

what

that cash Louis is another very

important

factor for that so anyway there's five quick things that you should look at that that I think could be more

important

than some of the

common things that you hear people talking about all the time on the news you know if you turn on CNBC that's pretty much all they're talking about they're talking about the news of the day

what

companies are reporting earnings

what

companies we should be buying mutual funds are big advertisers on those business channels and so they're trying to promote themselves people are talking about fees some people are talking with hey just go by the index and everything but really we have

a couple of other very

important

questions that we have to answer for ourselves before we even really take a step into picking those individual

investment

s so anyway hope you got some value out of today's video I mentioned it earlier but check out that resource center that we have we'll have some links right below the video here today there's going to be some additional free content that we have available that's not here on our YouTube channel some downloads some other videos

that's also going to be where we broadcast our live events which we have some great ones coming up here so if you haven't already go check that out register for it's completely free super easy to do and don't forget hit the subscribe button the like button share it and we'll see you back in our next video have a great day thanks