4.5 Portfolio Development

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4.5 Portfolio Development


Pages:
16
School:
University of Texas at Austin
Course:
Fin 320f - Foundations of Finance
Foundations of Finance Documents

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It is our choices… that show who we truly are, far more than our abilities Albus Dumbledore, in Harry Potter and The Chamber of Secrets, by J. K. Rowling, British novelist (1965 – ) Foundations of Finance 4.5 Portfolio Development • A job • Medical and dental insurance • Long-term disability insurance • A good credit rating • A will and living will • Renters insurance • A cash reserve • A retirement plan 2011 - 2023© H Toprac 3 If you are young, childless & single, you need:  Find out what your employer offers: • 90% of firms offer traditional 401(k) plans • 24% of companies offer Roth 401(k) plans  What if I’m self-employed? • Open an SEP account  What if I want to save even more? • Open a Roth IRA account 2011 - 2023© H Toprac 4 How to open a retirement account  Traditional 401(k) plans: • Contributions are made on a pre-tax basis • Earnings are tax-free • Upon retirement, distributions are taxed  Roth 401(k) plans: • Contributions are made on an after-tax basis • Earnings are tax-free • Upon retirement, withdrawals are not taxed 2011 - 2023© H Toprac 5 A 401(k) is a retirement account for employees



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