5 Smart Investing Money Moves To Make In 2020 To Maximize Your 401k or IRA.
By Wadler Fleurina on The Capital
This article was originally published at newvestor.com on Sunday, Jan 7, 2020.
Happy New Year 2020! In 2019, almost every investing strategy worked: stocks, bonds, gold. The longest bull market in recent memory lives on! Most, if not all investors, made money in the stock market in 2019. But what if you could make even more money? Here are 5 bold investing moves to help you make even more money in 2020.
1. Maintain your 2019 asset allocation portfolio.
If you had a diversified portfolio in 2019 (large caps, mid caps, small caps, foreign equities, bonds), you most likely experienced a nice, positive return on your investments. If your 2019 allocation strategy worked for you and you are satisfied with the results, maybe you shouldn’t change it.
2. Add income to your portfolio.
In case the bull market of 2019 does not fully carry over to 2020, consider adding income to your portfolio to help counter potential losses or a slowdown. There are many investing strategies you can use to add income to your investment portfolio. You can generate income via bonds, real estate investment trusts (REITs) or high-yield dividend stocks, among others.
Bonds are okay for income, but we don’t really recommend them for two reasons. REITs were created to help the regular person invest in real estate. By the very nature of their design, they MUST pay at least 90% of their taxable income to shareholders in the form of dividends! Stocks give you arguably the highest potential for capital appreciation, compared to mutual funds. But they are riskier than mutual funds. If you can stomach the volatility that comes with stocks investing, consider adding a few high-quality dividend stocks to your investing strategy to generate income. If you are not comfortable going along with dividend stocks, consider dividend mutual funds or ETFs instead.
3. Max out your 401k or IRA.
The maximum annual amount you can contribute to your 401k in 2020 is $19,000. But if you are 50 years and older, the IRS allows you to contribute an additional $6,000 in “catch up” contributions. For traditional or Roth IRA accounts, the maximum contribution is $6,000 or $7,000, if you are 50 years and older. Consider maxing out your retirement accounts in 2020 to maximize your money.
4. Don’t borrow or withdraw money from your 401k or IRA.
Just when everything seems to be going along just fine, this thing called life can throw you a financial curveball. You may be tempted to withdraw or borrow money from your retirement account, but if you can avoid it or resist the urge, you will give yourself an opportunity to seriously maximize your money in 2020.
5. Learn how to navigate stock market volatility.
The stock market goes up and down. That will never change! Big losses are sometimes followed by big gains or even bigger losses. If you make any rash or impulsive investing decisions, you run the risk of missing out on long-term gains. If you want to maximize your investments in 2020, learn how to navigate stock market volatility with these three simple steps: 1) stay calm; 2) buy more or the dip; 3) prepare to re-balance your portfolio.
The bottom line
Maximizing your money in 2020 does not have to be complicated. You just need to be a disciplined investor and make a few changes to your portfolio — changes that fit your personal needs or investing strategy.
Please share this article. If you are interested in submitting a guest post, please click here. Here are a few other articles you may find useful: 3 large-cap growth index funds for your investment account | 10 shocking reasons why you will be broke at retirement | Dividends: A simple money secret you should know about | How to invest $50 | index funds vs ETFs vs stocks.
