Retirement Planning

Retirement plans are one of the most important strategies we’ll develop over the course of our lives. Done properly, it’s a key ingredient to enjoying your sunset years without financial worries. Done poorly, it may result in a significantly lower quality of life after your earning years. When dealing with a decision this serious, it’s no surprise that people many turn to a variety of financial institutions to help and that’s where we come in. crown financial management offers a variety of services and free resources to help you retire comfortably.

Despite what many companies will tell you, there is no single recipe to successfully invest for retirement. Whether or not your retirement is comfortable depends on first identifying your individual retirement goals and time horizon, and then finding the proper balance of investments to accomplish your goals. These factors and your current financial situation will in large part determine whether you should focus on growth, income, or a combination of the two to sufficiently fulfill your financial needs. Yet, we believe that as much as 70% of the potential return on your retirement investments depends not on the specific security you invest in, but rather on the types of securities you choose,called your asset allocation. Your portfolio’s asset allocation is the key to understanding your potential for gain and your specific risks. Additionally, how these investments are made can significantly impact their ability to fund your retirement. For example, if the same mutual fund can be bought through an annuity, 401(k), Roth IRA, or a standard brokerage account, then the difference between the accounts’ fees and taxes affects how much of the fund’s gains you get to keep. The array of investment vehicles available can make investing for retirement bewildering for the inexperienced investor. As a firm serving more than 37,000 private clients, crown financial management has extensive experience in understanding how these numerous options can be assembled to support a wide range of goals. We are offering this guide to help investors understand the basics. We will take a look at a few of the main options for retirement investments, from different types of securities to tax-advantaged accounts.

Types of Retirement Investments: Securities


Stocks represent forms of ownership in a business. Of all asset classes, stocks have historically shown the best potential returns for investors over longer time horizons, but they are subject to high volatility in the short term. Some key things to keep in mind about stocks include: Common stock has high growth potential, but may or may not generate income through dividends. Preferred stock is more likely to generate dividend income, but will generally not grow in value to the same extent as common stock. If purchased through an account that doesn’t receive special tax considerations, the length of time a stock is held before being sold can impact how the proceeds of its sale are taxed. Stocks held for over a year in “taxable” accounts generally enjoy a lower rate, while those held for a shorter time are taxed as regular income under current law.


Bonds represent the debts an organization has taken on. They are, essentially, loans the investor makes to a company to be repaid at a specific time with a specific interest rate. Bonds have provided lower returns historically than stocks or similar equities, but they offer more reliable income with less short-term volatility. Key points for investors to remember with bonds include: Bonds generally have a fixed term called maturity. At this date, the borrower generally repays the investor’s principal and no longer has to pay interest. Bonds can increase or decrease in value when sold on open markets prior to maturity. For example, as interest rates move above or below the bond’s initial purchase rate, the value of the bond sold on the open market fluctuates. As bonds mature, replacements at the same interest rate may not be available, so it is important to account for how these potential changes might affect your cash flow. This concept is called interest-rate risk.

Mutual Funds

These are among the most popular retirement securities, as they allow investors who might otherwise find it impractical to purchase a diversified portfolio to pool their funds together and share the benefits. Mutual funds can be a great option for investors who are new to investing for retirement, but their fee burden (paid to the fund’s manager and salespeople) can add up significantly for larger portfolios. Despite their popularity, mutual funds do have some potential downsides investors should consider as well: Depending on the type of account through which the fund was purchased, tax events may be triggered even if you do nothing. Anytime securities in the fund are sold, the fund owners owe any net capital gains incurred. However, this impact can be mitigated through tax-advantaged accounts like IRAs or 401(k)s, where taxes aren’t levied until the funds are withdrawn. While the main benefit of mutual funds is diversification, there is a danger of having investments overly concentrated in specific sectors or products. Different funds may take a similar strategy or have significant investment overlaps, so it’s important to look at the underlying securities within each fund to maintain a diversified portfolio overall. Similarly, exposure to multiple funds can lead investors to work against themselves. For example, if one fund you own buys a stock while another you also own sells that same stock, your portfolio doesn’t actually change but you’ll get charged fees at both ends. Funds are generally developed around a specific purpose or strategy, typically without investor feedback. As such, it’s important to regularly re-evaluate your mutual funds to consider whether they remain appropriate as your retirement plan evolves. Mutual funds don’t trade in quite the same way as other securities, like stocks. Their values update at the end of each day based on the performance of the securities they own, minus any liabilities of the fund.

Types of Retirement Investments: Real Estate

Investing in real estate can be a good way to generate income. However, investing in this sector can be more complicated than simply putting money into bricks and mortar. For example, real estate can encompass other investment vehicles such as stocks in apartment-management companies, bringing additional and more complex risks. With so many ways to invest in this area, it’s important to consider how much exposure you already have when considering new investments. Of course, simpler real estate investments can provide good returns, such as cash flow from rentals and price appreciation that can be leveraged (think taking out a home equity loan). But there are many expenses to consider, including repairs, maintenance, property taxes, mortgage interest, management fees, legal fees, and more. Alternatively, when investing for retirement, you could choose a Real Estate Investment Trust (REIT). Similar to mutual funds, REITs are companies owning or financing real estate through pooled funds to produce an income for the fund owners. REITs can provide investors with regular income streams and long-term capital appreciation. Because their prices often respond to shifts in the economy differently than stocks, REITs are often sold as a diversification tool. But, as we’ve mentioned, this may not be needed depending on how the rest of your portfolio is invested. Investors should check how their other investments expose them to changes in the real estate market when considering if this is the right tool for their diversification.

Ways to Invest: Retirement Savings Accounts

Traditional 401(k)s

where contributions are deducted from your paycheck before tax is calculated, along with a matching percent from your employer. This both provides an instant return on your investment and lowers your current income tax burden. The money can continue to gain value tax-free until the time of withdrawal (usually after age 55, but potentially as early as 50 for Public Safety Officers), when it’s taxed as regular income.

Roth 401(k)s

re essentially the same as traditional 401(k)s, except with the tax benefits reversed. You contribute funds after they have been taxed, but that money (and any gains it generates) isn’t subject to future income or capital gains tax. An important note: Employer matches must still go into a Traditional 401(k), as they haven’t been paid to you or taxed as income yet.

Roth IRAs

The Roth version of an IRA again switches the tax benefits, where tax is paid on contributions upfront to shield all future distributions. It’s important to note that limitations on IRA contributions count across all IRA accounts owned by a single individual, no matter whether they’re Roth, traditional, or another specialized variety (like SIMPLE or SEP). There are also additional limits on contributions into Roth-style accounts for those earning higher incomes.

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