Traditional Versus Roth 401(k): Why Coronavirus Means Roth May Be Better

One of the most common questions we are asked as fee-only financial planners is “Should I make pre-tax or Roth contributions to my 401(k) plan?" There are a few variables that should guide your decision. Surprisingly, the impact of Coronavirus on our economy may be an important one. But before we get there, let’s start at the beginning.
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What's the Story Behind Your Investments?

Our economy is taking a severe hit right now, and there is real pain being felt by millions of Americans. There is no question about that. But while this is happening, the businesses you own are adapting, innovating, and adjusting to this new reality. This dynamic response lays at the heart of American capitalism. It will help find the solutions to the current crisis, and it is planting the seeds for the next phase of economic growth in our county, whenever that occurs.
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The Two Primary Drivers of Investment Performance

There are two primary drivers of investment performance: (1) The amount of your investment portfolio that is allocated toward stocks. (2) Investor Behavior. The percentage in stocks matters because equity investors get paid to take on the higher risk, or uncertainty, of stock investing. We call this the equity premium and it basically means that historically stocks win. Investor behavior matters because investor performance has historically been extremely different than investment performance because, frankly, we just aren't wired to make consistently good investment decisions. Learn about this and more in the latest episode of coffee, sweaters, and finance with the Trailhead Planners financial planning team!
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Investment Principles Trump Outlook (a.k.a. Buying During a Downturn)

Adding to your investment portfolio during a bear market can be emotionally challenging. We know this because we, as professional financial planners with deep-rooted investment experience, feel it too when it comes to our personal finances. Yet, in times like this we fall back on our investment principles and our financial plan to guide our decisions. Our core investment mantra: Investment Principles trump Investment Outlook
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Your Coranavirus Financial Playbook Part I

To help individuals families who have been financially affected by the coronavirus health and economic crisis, we are opening up the financial playbook we are using for our own clients. We love our Minneapolis and Portland local communities and we want to do our part to help (beyond social distancing). This is Part I of your Coronavirus Financial Playbook. We hope it's of service to you and we wish everyone health and well-being over the coming months.
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Six Investment Principles for Wealth Builders

During bear markets, we often find ourselves focusing on short-term outlooks that are highly unreliable. That's why our firm has a shared investment philosophy we coach our clients on and help them implement in their investment accounts. In our view, Principles trump Outlook. This helps us think clearly and act appropriately during times of heightened uncertainty, like the Coronavirus pandemic. Read on for our Six Investment Principles for Wealth Builders.
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