Investing for Owner Operators
 

with all this stimulating talk of profits,I am wondering what you guys do or what you would do as far as investing for the future/retirement?

I have been reading alot lately about index funds and am leaning that way.But I am largely oblivious to financial planning,any thoughts,not on my stupidity but on investing 8)

In todays environment it is very tough to invest.

Mutual funds are usually good, but unfortunately they usually have a large portion of financials in there.

There's one overriding truism when it comes to investing for retirement; the sooner the better. Compounding makes time your biggest asset.

A myriad of studies have shown that a simple basket of diversified low-cost index funds and minimal activity, is your best bet. There are a ton of books that deal with different approaches to this strategy. If you just want to get a feel, try listening to Bob Brinker. He was on ABC Talk but Sirius yanked it. I think it might still be on XM.

A good retirement plan is not any more complex than starting early, sticking to it, and minimizing risk.

Ok that confirms what I have been reading,only problem is the starting early part,I only have 25 years before I turn 68.

the book I'm reading right now is The Smartest 401(k) Book you'll Ever Read http://www.amazon.com/Smartest-401k-...1690167&sr=8-1

Look into roth IRA's. In todays market. NO tax on distributions at retirement age. for no risk investing do a certificate IRA for around 5% return.

25 years is still a long time. Remember, as someone who's self-employed, you have some vehicles that allow greater contributions than just a standard IRA. And once we get through this current mess, maybe we'll see some accelerated growth :lol:

The Roth tradeoff: No tax on distributions but I also believe no write off now. I'm sure someone will clean it up if I've messed it up.

I guess I'm gonna need one of those fancy pants advisors to help with all this :cry:

Money put in a Roth is after tax money.

IRA money is tax deductible, but not exempt from self employment tax.

Don't waste your money if you can avoid it. You're a smart guy, you can find the basic info (which is all 90% of the people need) pretty easily. You need to know two basic things.

1) What type of account to set up
2) How to invest in that account

If you can't afford to set aside more than $5000/year right now, keep it simple and go with a regular or Roth IRA. Go to Vanguard or Fidelity, their website will walk you through the setup. In fact, those sites have a lot of good information on the subject. Even if all you did was open an IRA and plunk your $5000 into a total stock market index or a money market, that's a good start. You can always adjust as you learn more.

HD's right. The great thing is that you can always move money from a standard IRA to a Roth later. So if you really need the deduction now, make the IRA contribution. Then maybe down the road you'll have a year where your taxable income is down for whatever reason and the tax ramifications make sense to convert all or part to a Roth (assuming the rules stay the same).