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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • Reasons To Consider An IRA Conversion Before Year-End 0 comments
    Dec 28, 2012 8:57 PM

    Morningstar Investment Research

    Morningstar Free Trial

    5 Good Reasons to Consider an IRA Conversion Before Year-End - by Morningstar Investment Research

    Deciding whether it makes sense to convert a traditional IRA to a Roth IRA is a complicated business. It's hard to say what tax rates will be next year, let alone 10, 20, or more years from now. That, in turn, makes it difficult to know whether you're better off incurring taxes today--as you're required to do when you convert--or when you retire. And unless retirement is close at hand, it's also tough to forecast what your personal tax situation will be when you retire. Even if tax rates go up across the board by the time you retire, you may still find yourself in a lower tax bracket than you did when you were working. The planned expiration of the Bush tax cuts at the end of this year provides a very good reason to take a look at an IRA conversion sooner rather than later--ideally by Dec. 31 of this year. (Remember that you needn't convert your entire IRA at once--partial conversions are also allowed.) Morningstar director of personal finance Christine Benz highlights five key reasons to evaluate a conversion before year-end.

    Don't Play Games With Your Withdrawals

    On her recent visit to Morningstar, financial columnist Gail MarksJarvis addressed key considerations regarding in-retirement withdrawals and how retirees can avoid the trap of falling short on income. She noted the unfortunate position in which retirees often find themselves, when they think they have enough funds to live on through retirement but run out of money sooner than expected. She also talked about the importance of having a safe withdrawal rate and understanding what works for you. MarksJarvis also discussed why retirees should let their money 'heal' after a poor market cycle because it will most likely increase in value in the following years. Finally, she touched on why retirees should be careful of getting locked into long-term bonds in the current market environment. Click here to watch the entire video, transcript included:

    Among the other topics we addressed this week:

    Tune in for Morningstar's 2012 CEO and Fund Manager of the Year Winners Winners will be announced Thursday, Jan. 3, 2013, from 12-1 p.m. CST on CNBC's Power Lunch.

    Active Equity Outflows and Fixed-Income Inflows Mark 2012 Year-to-date fund flows highlight investors' impatience with active equity underperformance, as well as a willingness to designate new capital for taxable-bond funds.

    Quality Bond Funds That Lagged This Year These core bond holdings had underperforming years that belie their long-term records.

    Is It Time for Floating-Rate Bank Loans? Bank loans look more attractive than high-yield bonds at the moment.

    Ring in the New Year With These Income-Generating Funds Make a resolution to add CEFs to your portfolio in 2013.

    A Preview of Sequoia's Coming Attractions Greater diversification means a host of new names.

    Three Up, Three Down We look at three recent Morningstar Analyst Rating upgrades and three downgrades.

    Self-Indexing: Conflict in the ETF Industry Some ETF providers are going to great lengths to avoid index middlemen, which is causing concerns about a conflict of interest.

    Deteriorating Moat Makes Warner Chilcott a Value Trap This pharmaceutical firm appears dirt-cheap, but a deeper look reveals bleak prospects.

    Targeting Dividends From Quality Companies, Northern Trust Rolls Out 3 New ETFs ALPS rolls out 4 ETFs, PowerShares to close 13 thinly traded ETFs, Direxion to shutter 3 volatility and insider sentiment funds, and Credit Suisse to redeem 4 ETNs. Plus, the week's best- and worst-performing funds.

    What's on Your Year-End Financial To-Do List? Readers share tips for improving their tax positions a nd whipping their portfolios into shape.

    Click Here for a Free Trial of Morningstar Investment Research

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