Planning Briefs

A Reminder: Always Expect Unexpected Events

Published Tuesday, November 4, 2008 at: 7:00 AM EST

What’s going to happen next on the investment scene? No one knows for certain. In fact, if there’s one sure thing, it’s that you can expect the unexpected.

For instance, events unfolding in the far corners of the world could affect your portfolio. Political unrest. Natural disasters. Deepening recession. Runaway inflation. Corporate scandals. They’ve all occurred before and will happen again.

So how do you protect your assets against a potential calamity? If you don’t have an investment policy statement (IPS) in place, it’s a good time to develop a game plan to address your needs. If we have already helped you create an IPS, rely on it to ride out the hailstorms.

The IPS outlines general investment goals and objectives, and, typically, it describes an asset allocation designed to meet those goals. It may also emphasize strategies tied to your risk tolerance, liquidity requirements, and retirement needs. Finally, the IPS may delve into other financial areas, including your estate plan.

The principal reason for developing a long-term investment policy, in writing, is to protect your portfolio from ad-hoc revisions during times of market turmoil and assure that your investments stay true to your long-term goals. Of course, an IPS isn’t a panacea for all possible ills. But it will help you be better prepared when the unexpected happens…and it will.

This article was written by a professional financial journalist for Preferred NY Financial Group,LLC and is not intended as legal or investment advice.

An individual retirement account (IRA) allows individuals to direct pretax incom, up to specific annual limits, toward retirements that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Tranditional IRA. Contributions to the Tranditional IRA may be tax-deductible depending on the taxpayer's income, tax-filling status and other factors. Taxed must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59%, distributions may be taken for certain reasons without incurring a 10 percent penalty on earnings. None of the information in this document should be considered tax or legal advice. Please consult with your legal or tax advisor for more information concerning your individual situation.

Contributions to a Roth IRA are not tax deductible and these is no mandatory distribution age. All earnings and principal are tax free if rules and regulations are followed. Eligibility for a Roth account depends on income. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).