Fund Trader Pro, LLC
Chief Investment Officer
William 'Bill' DeShurko started in the investment industry in 1987, learning early the financial perils of bear markets during Black Monday (October 1987) when the DOW dropped more than 20% in a single day. That lesson has guided Bill's investment strategy ever since. During the "Tech Wreck"in 2000 - 2001, frustrated by the losses in typical "buy and hold/diversified" portfolios, Bill created the computer based algorithm used today at www.FundTraderPro.com. The strategy behind the algorithm was tested using data from 1972 - 2005 by Professors Samuel L. Tibbs and Stanley G. Eakins. The results were co-authored with Mr. DeShurko and resulted in the paper, "Using Style Index Momentum to Generate Alpha" that won the Charles H. Dow Award in 2007. The Charles H. Dow Award is the most prestigious annual award given for the best paper that advances technical analysis in the year. The award is granted by the Market Technicians Association, the home of the Chartered Market Technician® (CMT) Program, the preeminent, global designation for technical analysis.
Author of: "The Naked Truth About Your Money" a primer for the Millennial Generation and all new investors to help with making responsible financial decisions. Available at: https://www.amazon.com/Naked-Truth-About-Your-Money/dp/1592576508/ref=sr_1_1?ie=UTF8&qid=1485467128&sr=8-1&keywords=deshurko
He became a life member of “Who’s Who in Business and Finance” in 2000
Bill is also a board and finance committee member for Homefull Inc. a non-profit group seeking to end homelessness in Dayton Ohio.
Managing Member and owner of 401 Advisor,LLC a registered investment advisor, since 2004
BA. Economics, University of Rochester
The opinions expressed are those of Bill DeShurko. Past performance is not a guarantee of future success. Consider all risks before investing and it is always advisable to consult with a professional before making investment decisions.
Reinvest, reinvest, reinvest!! Albert Einstein is usually credited with saying that compound interest is the eighth wonder of the world. By reinvesting your dividends, you take advantage of compounding interest. Don't argue with Albert.
The RMD for a 74 year old on $25,000 is just over $1,000. So by contributing $25,000 to a 401(k), you defer taxes on $25,000 of taxable income. According to the IRS life expectancy table, that $25,000 will be withdrawn from the IRA over the next 23.5 years, which allows you to continue to defer taxes on the gains made on the balance over that time.
As long as you have more than $25,000 of taxable income, I would make the contribution.
You assume that an "aggressive" mutual fund will make you more money than a less aggressive mutual fund. Why? Aggressive means more risk. Risk means there is an increasing possibility that your investment does not perform as expected.
There are no mutual funds that buy penny stocks, that should tell you something about the penny stock market.
Buy a solid stock mutual fund or ETF like SPY or the Vanguard S&P 500 Index Fund. Yes, they will go down in value during a market correction, but you will own the 500 largest companies in the U. S. Market and the value loss will be due to market fluctuation, not permanent loss from a company(s) going out of business.
That's what banks are for, you trade off low return for low or really no risk. Don't think you are a dummy for doing so, there is $14.6 trillion dollars in US deposit accounts and about an equal amount in the US stock market. As Will Rogers said, "I am more concerned about the return of my money than the return on my money." If anyone suggests anything more than 1%...run away.
That is a great question. In general, if you own any interest for paying investments like bank deposit accounts or bonds, they make great investments for a Roth IRA. As you point out, you are turning what would be high bracket taxable interest into tax-free interest. Whereas dividends and capital gains from stock investments receive a lower tax rate and would be less harmful in a non sheltered account. In a traditional IRA, you are still deferring tax gains from selling stocks that have appreciated.
The problem is the times we live in. Interest bearing accounts pay too little for this to be effective for a 28 year old. Avoid reaching for yield with Bank Rate, Junk Bonds, or Senior Loan portfolios. They all have a liquidity risk that needs to be monitored.
My advice is to stick with stocks, but use two different strategies. Maybe a large value fund that focuses on dividends with the Roth and split the Traditional between a Small Value Fund and a Large Cap Growth Fund. You can email me for some specific suggestions.