Category: Finance

Tips for Navigating a Stock Market Correction

Through his firm A Better Financial Plan, experienced financial planner Dean Vagnozzi promotes alternative investments that offer steady returns. Dean Vagnozzi advises his clients to leverage these investments to buffer their financial security from stock market dips and corrections.

Corrections are a normal part of stock market movement. A drop between 10 and 20 percent from a peak is considered a correction. Crashes are more severe declines, while a bear market persists in a downward trend for a sustained period. Over the course of the stock market’s 100-year history, corrections last on average less than two months and occur roughly once a year.

While most investment portfolios consider the impact of recurring corrections, investors may make poor decisions based on fear or uncertainty. For example, people may attempt to reallocate their investments based on what is going up at the moment. This strategy, known as timing the market, is far less effective than simply riding the correction out.

Most experts advise investment diversification as the best way to minimize losses during a correction. This includes investing in low-risk assets that are not exposed in any way to the stock market.

The Promise of the 1346 Plan

 

 

With extensive experience in helping people make intelligent investment decisions, financial advisor Dean Vagnozzi earned the reputation of providing alternative approaches to financial planning and investments. Dean Vagnozzi and his firm, A Better Financial Plan, commit to their clients and help them save their money and manage and grow their wealth.

One of the key services of A Better Financial Plan is the 1346 Plan. It is so important to the firm’s corporate strategy that the numbers “1346” are included in the company’s logo. Every potential client that comes to the firm seeking professional help in growing and protecting their investments is offered the 1346 Plan.

The 1346 Plan was inspired by George Samuel Clason’s book, “The Richest Man in Babylon.” In his book, Clason presented seven parables, each describing simple rules to save, generate, and protect wealth. After reading the book, Mr. Vagnozzi applied Clason’s rules to his own firm’s financial planning strategies.

The numbers “1346” represent the first, third, fourth, and sixth rules. Under The 1346 Plan, A Better Financial Plan will help the client with the first, third, fourth and sixth rules, which include saving up to 10 percent of one’s income, putting money into investments that pay over time, conserving capital, and investing in the right kind of life insurance.

Anyone interested in the 1346 Plan may visit www.getabfp.com.

Common Pitfalls of 401(k) Accounts

  As the founder of A Better Financial Plan, Dean Vagnozzi advocates against traditional retirement savings plans that rely on risky investing or tax-deferred savings accounts. Dean Vagnozzi advises his clients to avoid putting their nest egg in a 401(k) for several important reasons.

Firstly, since the average 401(k) is exposed to the stock market for a period 10 to 40 years before the account holder begins withdrawals, if the majority of the investing period occurs during a down market, there’s a risk of losing money or only experiencing modest gains. Furthermore, about half of all companies that offer 401(k)s do not provide an employer match. Without substantial contributions, the account balance can be quickly eaten by administration and service fees.

In the long-run, a 401(k) account can be financially disastrous if the account holder dies and transfers the balance to their spouse. The surviving partner must pay the higher single filer tax rate on withdrawals, which can negatively impact his/her financial security.

Why Tax Rates Can Increase After Retirement

For more than 15 years, Dean Vagnozzi has advised against risky investment or retirement plans based solely on the stock market. In his book, “A Better Financial Plan,” Dean Vagnozzi explains why the common refrain that people pay lower tax rates in retirement is false.

While many retirees anticipate entering a lower tax bracket due to reduced earned income, without proper tax planning, this may not be the reality. For example, married couples who earn $44,000 or more in combined income while receiving Social Security can trigger a steep tax on up to 85 percent of their benefit. The threshold is even lower for single filers.

Furthermore, the rising levels of national debt indicate that tax rates will go up over time. Relatedly, today’s workers are obligated to some of the lowest tax rates in 30 years. If tax rates go up, this can result in future retirees paying out more on withdrawals from taxable sources such as 401(k)s, social security, and pension plans.