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New Retirement Savings Rule

A new rule is about to be put in place that will affect those with retirement accounts and the financial professionals that manage them.  The rule will require advisors working with retirement accounts to put the clients’ interests first.  This rule should eliminate the incentive caused bias that advisors face when recommending investment products to their clients.

Retirement Plan Contribution Limits for 2016

Retirement plans are our favorite assets for our clients. 
The money invested in an individual retirement account (IRA) results in multiple tax benefits.  A contribution to your traditional IRA can result in a tax benefit by reducing your adjusted gross income.  The money in an IRA grows tax-deferred, compounding your wealth without paying capital gains taxes. 
 
Another added benefit is that the money is invested with a long-term mindset.  In a taxable account you may withdraw money to redo your kitchen, but withdrawing money from an IRA before age 59 and 1/2 comes with penalties. 
 
Most investors reduce their returns by succumbing to the emotional pressure of the market by buying high and selling low.  Having a retirement account helps reduce emotional pressure because you're in it for the long haul. 
 

Retirement Plan Contribution Limits for 2015

Submitted by Todd Greenberg and Joseph Bell on March 18, 2015

Retirement Plan Contribution Limits for 2014 and 2015

Retirement plan assets such as IRA/Roth IRA, SEP and 401k assets continue to be our favorite type of account to invest in for the following reasons;

1. Initial tax advantages for an IRA, SEP and 401k you get a tax deduction in the current year.  For a Roth IRA while you do not get the initial tax deduction you do not pay any taxes when the money leaves the account. 

2. Tax deferred growth.  Meaning you pay no taxes on gains for as long as the assets are still in the account. 

Below are the contribution limits for both 2014 and 2015.  For an IRA and Roth IRA you have until April 15th of 2015, to make a contribution for 2014.   

 

The Power of Compounding

Submitted by Todd Greenberg and Joseph Bell on July 23, 2014

Often we are asked how we believe the market will perform over the next 6 to 12 months; unfortunately the answer is that we just don’t know.  What we do know is that historically the markets have performed quite well in the long run and by taking advantage of the power of compounding, we believe reasonable amounts of money can evolve into significant amounts of money over time. 

Albert Einstein called compound interest “the greatest mathematical discovery of all time.”  The power of compounding is about letting your earnings (capital gains, dividends and interest) earn more money for you going forward.  Compounding is similar to a snowball rolling downhill, with each revolution the snowball gets bigger because it picks up more snow.  

Retirement Plan Contribution Limits for 2014

Submitted by Todd Greenberg and Joseph Bell on May 2, 2014

These are the contribution limits for 2014, set by the IRS. 

Maximum annual IRA contribution (under age 50) $5,500
Maximum annual IRA contribution (age 50 or over) $6,500
Maximum annual 401(k), 403(b), or 457 salary-deferral limit (under age 50) $17,500
Maximum annual 401(k), 403(b), or 457 salary-deferral limit (age 50 or over)* $23,000
Maximum annual additions limit under defined contribution plan $52,000
Maximum includible compensation for computing contributions $260,000
Maximum SIMPLE salary-deferral limit (under age 50) $12,000
Maximum SIMPLE salary-deferral limit (age 50 or over) $14,500
Minimum annual compensation for determining a "highly compensated" employee (used in 401(k) nondiscrimination tests) $115,000
Minimum annual compensation amount for SEP participation $550

 

Stocks vs Bonds

Submitted by Todd Greenberg and Joseph Bell on April 8, 2014

The chart above shows how different asset classes have performed, on average, over the last 86 years.  Surely a difference of a few percent may not seem like a big deal on a yearly basis, but over long periods of time that difference can have a significant impact on your investment. 

Historically stocks have had higher returns than bonds for various reasons.  Stocks represent ownership in a company’s profits as well as their losses.  Although a stockholder cannot lose more than their initial investment thankfully, losses do decrease the value of their holdings.  Bondholders don’t have any ownership or voting rights in a company.  However, they are the first in line to be paid in the event of bankruptcy, unlike common stockholders, who are last in line to be paid.  Since bondholders’ risk of loss is lower they are paid a lower return on their investment.    

 

Who are we?

Submitted by Todd Greenberg and Joseph Bell on March 1, 2014

The name Lowell Road comes from the street where my wife and I purchased our home ten years ago (after outgrowing a two bedroom apartment with two kids and a dog, now three kids).  At the time the purchase of our house was a big deal for us.   

Over time our objective at LRAM is to generate above average returns for our clients by following our logical, repeatable approach to value investing while providing the best customer service possible. 

Whether your money will eventually be used for retirement, education, real estate, philanthropy or a great trip we realize that the money you have entrusted us with will one day be used for something that is important to you.  While we don’t have a magic wand, we do have a strategy and a process that we believe will continue to generate successful returns for our clients over time.  

 

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