Simple & Effective Investing: 5 Tips for Long-Term Success

When I decided to manage my own investment portfolio, I knew it was time for me to study up. After all, this was my family’s future we were talking about here.

I sought out resources, books, voices, and tools that made the investing process as simple as possible. With all the other responsibilities I had in my life as a husband and father, I didn’t have time to spend hours each week monitoring my portfolio.

After educating myself and interviewing over 200 money experts, certain smart investing truths continued to ring true. We started to use them for our family’s investments and they have helped us quite a bit. We’ve learned to remain calm in the face of a down market and have now set ourselves up for a comfortable retirement (and potentially an early one at that).

Among others, here are 5 smart investing strategies that help our family keep the process simple, effective, and financially rewarding.

1. Invest with Tax Advantages

Benjamin Franklin once said, “Nothing is certain but death and taxes.” This statement is quite true. I don’t have any advice on that first certainty, but I do love looking for ways to reduce our tax burden each year.

Read More: Guide to Filing Your Taxes in 2021

When it comes to investing for our retirement, we take advantage of as many tax savings opportunities as possible. Here are a few:

• 401k: Through investing pre-tax in our workplace 401ks, we reduce our taxable income each year and pay fewer taxes today. The tax bill will come due when we withdraw the funds in retirement. There is also a Roth 401k option that allows us to invest after-tax dollars that grow tax-free as well.
• IRA: Similar to a 401k, we’ve used both a Traditional IRA and a Roth IRA to invest pre-tax and after-tax dollars for retirement. When we contribute to both a 401k and IRA, we are truly boosting our chances for a comfortable retirement.
• Health Savings Account (HSA): We use our HSA to help us save on taxes for qualified medical expenses and if we’re lucky, a stealth retirement fund.

By utilizing these three tax advantaged investing vehicles, we’re reducing our tax burden (legally) and growing our accounts as well. Over time, our investments will grow and give us a comfortable retirement nest egg and funds to support our healthcare needs as well.

Personal Capital put together a guide for investors who want to tax- optimize their portfolio. It’s free to download and unlocks access to the Personal Capital Dashboard, an all-in-one money management tool.