One of the vexing questions in the investment world is why many investors are inattentive to fees. While Vanguard has helped create a class of investors that’s fee-conscious and fee-aware, the fact remains that many individual investors remain in high-cost funds (and in other high-fee advisory strategies).
Year-end is fast approaching, and based on web traffic it seems like the question of converting traditional IRA savings to Roth savings looms large. Congress has added to the buzz by allowing the conversion of certain pre-tax 401(k) money into Roth money (though few plans will offer this option in 2010).
Before you jump on the conversion bandwagon, I want to raise a critical question: What if tax rates don’t go up?
We at Vanguard educate, cajole, and opine everywhere on the importance of keeping your investment portfolio diversified and matched closely with your risk profile. We should be saying more about just where you’re keeping those investments.
In June 1997, Chicago Tribune writer Mary Schmich penned a now-famous column titled “Advice, like youth, probably just wasted on the young.” In short, the column served as the speech that Ms. Schmich would give if she were asked to make a commencement address. The following year, the column went viral, if you will, in the form of the music single “Everybody’s Free (To Wear Sunscreen).”
Do you have a tax refund coming? Some would say it means you over-withheld and should have paid less last year. Others look at it as a non-interest-bearing savings account. I’d look at it as an opportunity to improve your financial picture and prepare for the next inevitable downturn—whether it happens next week, next month, or five years from now.
