By picking the right stocks for your retirement portfolio and using the right tax strategies, you can grow your retirement fund much more quickly than you might have if you simply left it in a 401(k) invested in an index fund. These days, social security and other traditional retirement income sources cannot be relied on so that consumers may want to invest independently.
Tactics for minimizing tax liability
It’s important to find ways to minimize tax liability when it comes to retirement savings. There are several retirement tax strategies you should be aware of going forward. The following are two examples, but there are many more:
Putting funds in a traditional IRA
With an IRA, up to $5,500 a year of investment income can be sheltered from tax payments. Over the course of the entire life of a retirement portfolio, this can add up to a lot of tax savings.
Tax loss harvesting
Harvesting tax losses can help to minimize tax liabilities on investments. It involves selling off any investments with unrealized losses so that losses can be realized and deducted from profits to minimize taxable income.
Types of businesses worth investing in for retirement
When it comes to investing for a retirement portfolio, you want to be looking out for businesses to invest in that show reliable long-term growth. With saving for retirement, you’re not in any hurry to bring in returns right away. You want reliability over time rather than short-term profits. Here are some examples:
Apple is currently offering 1.7 percent dividend yield. While Apple is a company known for doing manufacturing overseas to minimize production costs, they are equally known for the quality of their products. These priorities have led Apple to expand beyond China in search of other countries to house the factories under their command, including Mexico. Given the latest Mexico manufacturing information, who could blame them? Apple currently has an 11 percent market share on the global smartphone market. Every consumer probably understands that those who do buy Apple products are die-hard fans so that the company is not going anywhere in the near future and is likely to show continued growth with such heavy media coverage of new product releases.
Founded in 1906, Honeywell has a long history of producing both consumer and commercial products. The company currently offers a 2.4 percent dividend yield. The company has a global network of distribution for its products. It has also gotten into many technologies and products related to the internet so that it is clear the company is capable of adapting to the times.
Medtronic is a producer of medical services and technologies. It has shown reliable growth in annual dividends for the last five years. In fact, the dividend growth rate of the company has been 13.3 percent over the last five years. As of late 2018, the year to date gain of the stock has been 17.4 percent. Medtronic is the largest medical device company in the works, and it has a long history being founded 69 years ago in 1949.
These are just a few examples of companies worth investing in for achieving (and affording) a dream retirement after your working days are done. There are undoubtedly many more, with the exact names and number changing any given quarter. With this in mind, having tax professionals and financial advisors on standby to help guide you through the process is probably a good idea, especially given the volatility of the recent short-term market forecast.