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Category: Investing

Retirement Investment Accounts: Which One Is Right For You?

Posted on by Hillary Mitchell

If you have long-term or retirement investment goals, you may be thinking about investment strategies to match. Selecting a retirement investment account suited to your precise situation can help you reach those goals more effectively.   

Retirement investment accounts allow you to invest money now so it can grow over the course of your career, and you can eventually draw on it after you reach retirement age.   

There are numerous options when it comes to retirement investment accounts:  

401(k): a popular retirement savings plan many employers offer. You contribute to these directly through your paycheck, and your employer may match those contributions. The employer match is essentially “free money” your employer adds to your account just because you’re contributing!

  • Solo 401(k): This operates like a regular 401(k) but is created for those who are self-employed. 
  • 403(b): An account offered by only non-profit organizations and public schools as their voluntary retirement savings plan instead of a 401(k). 

IRAs: IRAs, or individual retirement accounts, are accounts individuals can open on their own (without their employer’s involvement) or sometimes with their employer. Contributions to these accounts are separately calculated from any 401(k) contributions—allowing you to put more towards retirement in a tax-advantaged way.  

  • Traditional and Roth: These IRAs may offer individuals more control or flexibility than a 401(k) with either pre-tax or after-tax savings.
  • SEP IRA and SIMPLE IRA: IRAs typically utilized by a small employer or self-employed individuals. SEP IRAs allow only employer contributions, whereas SIMPLE IRAs allow both employee and employer to contribute.

Getting Started 

A good first step might be to get in touch with a financial advisor you trust. This is especially the case if you’re self-employed or if you’re thinking about retirement investments beyond an employer-sponsored 401(k). A financial advisor can help you decide what retirement savings vehicles are appropriate for your needs and help you streamline the complex startup processes.   

Once you’ve found the right financial advisor for you and you’re ready to start investing, the following practical steps should help you get started:   

  1. If you’re interested in starting your investment journey with a one-time lump-sum investment, look at what you have in your accounts right now. Think about your upcoming short-term financial needs and any sums of money you prefer to keep tucked in an accessible short-term account (e.g., an emergency fund). After that’s accounted for, is there an amount of money you’d feel comfortable investing in a medium- or long-term account?  
  2. Next, look at your monthly cash flow. What seems like a reasonable amount to start investing every month? Is there a sum you’d be comfortable committing to, month in and month out? Of course, you can always alter this after you begin investing, but doing your research upfront to reach a consensus will save you stress later.   
  3. Finally, check with your financial advisor to see your automation options. If you can automate your monthly contributions into an investment account, that will make your investment journey that much easier!   

 If you’re interested in talking to a Commas advisor about your specific situation and the right retirement savings plan for you, you can schedule a conversation here. Let’s talk! 

Investing for Middle-Term Goals

Posted on by Hillary Mitchell

Most people have a two-pronged approach to meeting their financial goals: save for the short-term, invest for the long-term.   

Near-future goals like replenishing your emergency fund or taking a trip tend to be top of mind and funded easily enough through a traditional or high-yield savings account. Meanwhile, long-term goals, like retirement, are well-suited for investment accounts designed to grow over decades.  

While both of these are smart financial strategies, what about goals that fall somewhere in between? 

Why Focus on Middle-Term Investing? 

Generally, middle-term goals are significant financial milestones expected within the next 5–20 years, such as: 

  • A down payment on a home 
  • Tuition for children 
  • Travel and vacations 
  • Purchasing a new car 
  • Buying a second home 

Keeping these funds in a standard savings account means missing out on potential investment growth. By utilizing the right investment accounts instead, you can take advantage of market growth while maintaining access to your funds when needed. 

What Type of Accounts Work Best for Middle-Term Goals? 

The best choice is often a taxable investment account. Unlike tax-advantaged options like 401(k)s or IRAs, taxable accounts let you access your money anytime without restrictions. While you’ll need to pay taxes on earnings, these accounts offer greater flexibility, making them great for medium-term investing. 

A popular option is a brokerage account, where you can deposit money with a licensed brokerage that handles trades and investing for you, but you still own your investments and will need to report any capital gains when filing your taxes. 

Your financial advisor can help you navigate the nuances of taxable accounts, but in general, they offer a balance of investment growth and liquidity—making them a strong fit for funding middle-term goals. 

How to Get Started 

Starting a middle-term investment strategy is straightforward: 

  1. Identify your middle-term goals. Determine what financial milestones you want to achieve in the next 5–20 years. 
  1. Consult a financial advisor. A professional can help you select the right investment approach based on your goals and risk tolerance. 
  1. Review your existing accounts. Assess your current financial situation and determine how much you can allocate toward middle-term investments. 
  1. Set up automatic contributions. Consistently adding funds to your investment account can help build momentum and ensure progress toward your goals. 

If you’re ready to explore investing options for your middle-term goals, our team at Commas can determine the right fit for your specific situation and help you get started.

Benefits of a Roth IRA

Posted on by A.Tuke

When thinking about your financial priorities, retirement may not be top of mind–especially if you’re in your early or mid-career and focused on shorter term goals like buying a home, managing student debt, or saving for your kids’ education. While retirement may seem a long way off, your early career is actually the ideal time to start saving into a Roth IRA so you can take advantage of a lower tax bracket, a long investment horizon, and years of compound interest.

How It Works

A Roth IRA is an individual retirement account funded with after-tax income. Since the money has been taxed before contribution, you’ll never be taxed on those funds again and your investments will grow tax-free, and withdrawals in retirement are also tax-free. 

Unlike workplace retirement plans like a 401(k), a Roth IRA is also owned personally, giving you greater flexibility when it comes to managing your account. This also means you have the ability to contribute the maximum into both your employer 401k and Roth IRA. 

Key Benefits of a Roth IRA

  • Tax-Free Growth & Withdrawals: Contributions are made with after-tax dollars, so you won’t pay taxes on your investment gains or qualified withdrawals (and neither will your beneficiaries).
  • Penalty-Free Contribution Withdrawals: You can withdraw the amount you’ve contributed at any time without tax or penalties, but withdrawing earnings before retirement (or age 59.5) may have restrictions.
  • No Required Minimum Distributions (RMDs): Unlike traditional retirement accounts, you’re not required to withdraw funds at a certain age, allowing your savings to continue growing tax-free.

Roth IRA vs. Traditional IRA 

Both Roth and traditional IRAs help you save for retirement, but they differ in tax treatment: 

  • Traditional IRA: Contributions are tax-deductible now, but withdrawals in retirement are taxed as income.
  • Roth IRA: Contributions are taxed upfront, but withdrawals in retirement are tax-free.

Contribution & Withdrawal Rules

  • Withdrawal Rules: Contributions can be withdrawn anytime without penalty, but withdrawing earnings before age 59.5 may result in taxes or penalties unless certain conditions are met.
  • Backdoor Roth IRA: High earners above the income limits may still contribute through a strategy called a Backdoor Roth IRA.
  • Inherited Rules: Congress has passed a law requiring inherited Traditional and Roth IRAs be emptied in 10 years. When you pass down a Roth IRA, your heirs will be able to make tax-free withdrawals (instead of the taxed withdrawals they would be making from a Traditional IRA), saving them significant taxes—and effectively providing them a larger inheritance!

When to Start a Roth IRA 

The best time to start is as soon as possible! As long as you have earned income, you can contribute to a Roth IRA now so you can reap the benefits later. Additionally, contributions for the previous year can be made until the tax filing deadline (April 15).

How to Open a Roth IRA in Four Steps 

  1. Choose a Provider: Select a trusted financial institution and review any fees.
  1. Complete the Setup: Provide your Social Security number, banking details, and beneficiary information.
  1. Select Investments: Align your portfolio with your risk tolerance and time horizon.
  1. Set Up Contributions: Choose a lump sum or automatic monthly contributions.

Is a Roth IRA Right for You? 

Want to build wealth long-term, but don’t have the spare time or mental resources to dedicate to investigating all of your options, building out a plan, and reorganizing your finances? We can help.

Financial New Year’s Resolutions: 10 Goals for 2025

Posted on by Hillary Mitchell

The clean slate of a new year often comes with fresh motivation to meet our goals—whether that means reading more, getting in shape, or spending more quality time with loved ones. For some, these goals revolve around a particularly stressful topic: finances. While setting financial new year’s resolutions can feel daunting and complicated, the long-term return and peace of mind is well worth the effort.

To get you started, we’ve compiled a few tips from our team to reduce mental stress and help your financial life run like a well-oiled machine this year. Here are ten financial new year’s resolutions for your 2025:

Get better at budgeting. 

The key to budgeting is tracking and understanding your spending habits. Once you understand your habits, you can make incremental changes to meet your goals. When doubt, use the 50-30-20 rule. That is, you should allocate 50% of your budget to essentials, 30% for discretionary expenses, and 20% to savings.   

Max out your 401K contributions. 

While this is easier said than done, we recommend prioritizing these contributions as much as you’re able. At a minimum, you want to be contributing enough to get the full match from your employer. If possible, try to max out your 401k or employer plan at the annual limit ($23,500 for 2025).   

Automate your savings. 

Set up your accounts so that part of your paycheck automatically goes to a savings or investment account before you have a chance to spend it. You might also consider setting up different savings accounts for different goals. For example, an emergency fund account (which should be a top priority) can be separate from your vacation planning account.   

Update your estate plan and will. 

Ensuring your estate plan and will are up-to-date relieves the burden of making difficult decisions in a crisis. If estate planning feels overwhelming, don’t worry. Your Commas advisor can help you get connected to the right resources and ensure you have beneficiaries where appropriate. In the meantime, start small by creating a list of your personal and financial information and accounts, as well as your passwords, and put them all in a secure place.  

Pay attention to what conversations you have about finances. 

Every household’s approach to their finances is different. Whether you manage your finances individually or have shared accounts with another person (or people, if you have children), identifying the culture around money in your home can be a good early step in decreasing stress and finding financial peace of mind.  

Try asking yourself these questions:

  • What truly matters most to me, and how well do my financial decisions support those priorities? 
  • How do I/we make decisions about spending, saving, and giving, and what does that reveal about my/our shared priorities and values? 
  • Do we have open and honest conversations about money, or is it a source of tension in our home? 

For parents: 

If you do have younger children, you might consider using an app like Greenlight to offer an allowance and help them start understanding financial basics like spending, saving, and giving. Getting started young allows your kids to make (and learn from) financial mistakes while the stakes are still low, in a safe environment.  

If your children are teenagers or young adults and require less supervision, conversations will shift to managing money earned at a job, saving for college, or filing taxes. Talking about money with kids of any age shows you’re comfortable discussing finances with them—and opens the door for them to come to you with financial questions.   

Read (or listen to) a great book. 

Use some time this year to explore literature on financial management, investing, and market history. We particularly recommend The Investment Answer, The Opposite of Spoiled, The Psychology of Money, and The Millionaire Next Door.  

Track all your charitable giving. 

With some smart planning, you can increase your charitable giving by using available tax benefits. By taking time to educate yourself on the benefits of charitable giving, you can gift more by gifting smarter.  

Don’t let the content stream overwhelm you. 

With an incredible amount of content and current events coverage more accessible than ever, it’s often difficult to keep panic—or, at least, a constant sense of anxiety—at bay. Today’s financial news might seem urgent, and the markets may fall, but it’s the long-term view that matters most when it comes to investing. We know the markets reward discipline and resilience. Before you act on what you come across on your newsfeed, take a step back and refocus on your end goal.  

Don’t wait until April to do your tax planning. 

Rather than waiting until the last minute to scrounge up paperwork, spend some time thinking ahead about what you’ll need to file your taxes. This mindset may also end up saving you money, as some tax benefits can be gained by taking certain actions prior to December 31.  

Add this bonus financial new year’s resolution: create a file system (if you don’t already have one) to keep your tax paperwork handy throughout the year, especially if you work for yourself or run a business. 

Connect with a financial advisor. 

Financial advisors aren’t just for soon-to-be retirees. In fact, if you’re in the early or middle stages of your career, a relationship with a trusted financial advisor can make a significant difference to your future by helping you circumvent commonly made mistakes and stay on track with your goals. 

Having an experienced professional who can take an objective view of your financial situation and guide you through complicated financial decisions like major purchases, long-term savings, or equity compensation elections can help you make the most of your wealth accumulation years—and provide peace of mind along the way.  

If you have found yourself setting a goal to ‘get your finances in order’ for another consecutive year, it may be a good time to talk with a professional! At Commas, we love to work with people who are motivated to make the most of their income—even if they’re not sure where to start. If that sounds like you, we can help. Let’s talk. 

Benefits of a Roth IRA

Posted on by Kelsie Joos

Investing in a Roth IRA is a great option for when you are younger in your career. By paying taxes upfront while you’re likely in a lower tax bracket, you’re setting yourself up for tax-free growth on that money for life. This means that when it’s time to enjoy your hard-earned savings later, both your contributions and gains can be withdrawn without any extra tax.

“The Roth IRA is one of our favorite accounts and the reason is: you make contributions into the Roth IRA and you say I’m okay paying the tax on these funds today, but we’re in historically low tax brackets. And when you’re younger in your career, hopefully you’re earning less than you will later in your career so the idea is that your tax bracket and the income that you’re making is only going to increase over time. So, while you’re in a lower tax bracket can we pay the tax today to get the money into the Roth where it can grow tax free for the rest of your life. So when you go to pull funds out of the Roth IRA, not only is that contribution that you made tax free, but so is all that growth.”

Will the Election Impact My Plan?

Posted on by Kelsie Joos

The 2024 presidential election cycle is in full swing. If you’re wondering how the upcoming election may impact your financial plan, check out the latest video from Commas Sr. Financial Advisor Josh Bentz.

“One question that we’re getting a lot right now from clients is: should I be worried about what’s happening with this upcoming election? Which is a valid concern, obviously there’s some tense things going on in the world. But our answer is: no, there’s really no correlation between your investment plan long term and the outcome of this election. The main trend that that we focus on for long-term investors is that the market provides the best source of returns for your long-term goals. And that is not really impacted by republicans or democrats or anything like that. That’s just how markets work. So if you’re a long-term investor, don’t worry about what happens in the next three to six months. Focus more on the long term. If you’re a short-term investor, you probably need to make sure you’ve got a plan in place that’s not going to be impacted by short-term moves in the market anyway.”

What is an HSA?

Posted on by Kelsie Joos

A Health Savings Account (HSA) is the only type of account that allows you to potentially contribute money and never pay tax on it. Use it for medical expenses, and it’s 100% tax-free—even decades later.

“Health savings accounts are one of my favorite types of financial accounts. These accounts are the only types that allow you to potentially contribute money and never pay tax on it ever again. So you get a tax deduction in the year that you put money in a health savings account. You can actually invest the money just like you would in your 401(k) in your investment account and it can grow over time. And down the road when you pull the money out of that account, if you use it for qualified medical expenses, it can be 100% tax free. What’s even cooler is you can reimburse yourself for past medical expenses. So let’s say we’re 30 years down the road and you need some tax-free income, you can reimburse yourself for a medical expense that happened 20 or 30 years in the future.”

What is a Mutual Fund?

Posted on by Kelsie Joos

Think of mutual funds as your basket of opportunities, spreading your investments across hundreds or thousands of companies. With just one product, you can own a piece of the tech giants, small startups, and more, reducing risk and maximizing potential returns.

“I think of a mutual fund as like a basket of stocks. So you can go out and you can buy Apple or Microsoft or any public company out there, but a mutual fund will go and grab hundreds or thousands of those companies and build them basically into one product that you can buy and that way you’re not just solely invested in one company you can be diversified and own a bunch of these companies. Whether they’re tech companies or small companies and it just gives you a little bit better edge rather than putting all of your eggs in one basket.”

2024 Contribution Limits

Posted on by Kelsie Joos

401k, HSA, and IRA contribution limits have increased for 2024, giving you more opportunities to boost your savings! As the halfway point of the year approaches, now is a great time to review your current savings rates and adjust accordingly.

“New contribution limits for 2024 for 401k, HSA, and IRAs:

401k contribution limits have increased from 22,500 to 23,000 for the 2024 tax year. The catch-up contribution for people who are over 50 or turning 50 in 2024 is 7,500. Now the entire plan contribution limit is up from 66,000 to 69,000, so this includes your employee contributions, any match that your employer gives you, as well as any after-tax contributions that you would be making. So if your plan offers a mega backdoor Roth strategy or after-tax contributions or in plan Roth conversions, this is where that would come into play.

Traditional IRA and Roth IRA contributions have increased from 2023 to 2024. Instead of $6,500, you can now get $7,000 into those accounts. If you’re over 50 or turning 50 in 2024, you can get in an additional $11,000. In order to contribute directly to an IRA you need to be under the income limits. For married filing jointly filers, that limit is $240,000 and for single filers it’s $160,000 so once you get to that point, that’s when you want to talk to your advisor about possibly doing a backdoor Roth IRA strategy.

If you’re in a high deductible health plan you have access to contribute to something called a health savings account or an HSA. The contribution limits have increased from 2023 to 2024. If you are are in a family plan, you can now contribute $8,300. If you’re in an individual plan, you can now contribute $4,150. If you’re over 50 or turning 50 this year, you can get an additional $1,000 into that account. Now remember, these are total plan limits so if your employer gives you a match, that would be included in that dollar amount.”

Tying Equity Compensation to Your Financial Goals

Posted on by Kelsie Joos

Receiving company stock as part of your compensation package is a great perk offered by many companies. To maximize this benefit, it’s essential to plan ahead and make the most of your equity compensation by aligning it to your own financial goals.

“One thing I like to help clients think about is tying their equity compensation to their financial goals. We’ve had many clients who will use the proceeds from their stock awards to purchase a new home or to fund their kids education, so it’s really important to have a plan for your equity compensation and to know what you’ll do with the proceeds when you receive them.”