Start by setting priorities. Although both education and retirement are important to you, you’ll need to decide how to allocate your investment dollars between these two goals.
Next, choose the right investment vehicles. In general, it’s a good idea to put as much as you can into your 401(k) at work. You probably also can contribute to a traditional or Roth IRA. To save for college, explore a 529 plan.
By following these strategies, you can move forward toward two special times in life college for your children and a happy, well-deserved retirement for you.
“Munis” Can Still Work for You - Even in Tough Times
As you may know, municipal bonds typically pay interest that’s exempt from federal taxes, and often from state and local taxes, too. This could be a big plus for you if you’re in one of the upper tax brackets. But given the current financial difficulties of state and local governments, are municipal bonds (or “munis”) still viable investments?
The outlook may be brighter than you think. Investment-grade municipal bond default rates historically have been low. Also, municipalities are making decisions such as cutting spending, and, in some cases, raising taxes that should help them continue making timely payments to municipal bondholders. Furthermore, municipalities must still fund various projects, and even one bond payment default could harm their ability to borrow money in the form of new municipal bonds.
So by investing in munis, you can support worthwhile projects in your area and receive a steady source of tax-exempt income.
Contact Wendell at Edward Jones www.edwardjones.com.