Politicians and the wealthy have advisors at their disposal to help them save taxes. How can the average person use tax laws to their advantage? Follow these tips from Winter Troxel, Retirement Planner at Bridgemark Wealth Management.
1. Change how much you invest in your 401K throughout your career
When you’re first starting out in your career, put just enough money into your 401K to match your company, and subsequently pay more taxes. Presumably your income will increase over the course of your career. It’s best to pay more taxes when you’re making less money. When you’re mid-career, put more money into the 401K. As you’re nearing retirement, adjust the amounts as you see fit.
2. Choose tax-efficient investment options
When you invest money, you’re essentially paying a broker to help you beat the stock market. As they’re managing your money, they’re also buying and selling other stocks. This generates a transaction cost; which leads to an invisible tax. You can save thousands if you have your investments held more tax efficiently.
3. Hope for the best, but plan for the worst
Losing money in the stock market can’t always be avoided. Your retirement plans can be put on hold if you make a bad move. Take inventory of your assets, and understand what you absolutely have to protect. But know that options with high risk often have high reward, and invest wisely.
This article is sponsored by Bridgemark Wealth Management