Do you have a lot of medical bills that you pay on each month? Could those medical bills be deducted from your tax bill this year? I was helping my mother take care of all of her finances after my dad passed away. I didn't realize how many bills she had coming in each month for medical treatments that my dad had undergone months, even a year earlier. I started doing some research about medical bills and tax deductions. If you have medical bills, take a minute to read through this blog to gain some knowledge that can help you decide what you can do when tax time comes around.
If there is one piece of advice most commonly offered by financial planners, it is to diversify your portfolio. A strong portfolio is one that includes a healthy mix of traditional investments as well as fixed income investments, passive income streams, and investments in a company or project you are passionate about.
Build Your Portfolio over Time
One method of diversification to consider is investing your funds over a period of time. Lump sum investing could cost you in future returns, as the market is plagued with peaks and valleys as a result of economic volatility. Decide on an amount you want to invest and use dollar-cost averaging to make contributions to your investment on a regular basis, rather than all at one time.
Build Passive Income Streams
For an investment portfolio to be strong, investors should consider adding some passive income streams into the mix. Passive income steadily builds in equity after an initial investment. For accredited investors, this can be a prime opportunity to build wealth. Real estate, and pensions can significantly reduce risk while also diversifying investments.
Fixed Income Investments
Fixed income investments are available in a variety of forms and are more commonly known as bonds and money market securities. These are loans made by an investor to a corporate or government borrower. The borrower then agrees to pay fixed interest regularly until a maturity date that is established in advance. As the maturity date nears, the borrower promises to return the principal amount of the bonds to the investor. The following are examples of fixed income investments:
· Government treasuries: The federal government issues these with maturities ranging from months to 30 years. Treasuries are backed by government credit, making them the highest quality fixed income investment.
· Municipal bonds: These are issued by states, cities, and local municipalities. They finance projects run by these entities and offer a tax-efficient way of generating income.
· Corporate bonds: these are debt issued by corporations for a variety of investments. Corporate bonds are often more risky than other fixed income investments because they are debt issued by higher-risk companies with lower credit quality but having higher yields.
Remove Investments That Aren't Performing
From time to time, it may be necessary to remove investments that are under performing. It is ideal to pay attention to market conditions and remain current with your investments. There is no reason to hang on to investments that are too risky, not providing a high yield, or are backed by companies in turmoil. Diversifying your portfolio in this way can have a positive impact on building your wealth.
Establish a diversification strategy even when the market is booming. However, since you can never predict how the market will behave, having a solid mix of investments in your portfolio is crucial. For more information, contact a business such as Amos Maney & Payne CPA's LLC.Share