Tax Tip
Dollar-Cost AveragingDollar-Cost Averaging involves investing each and every month of the year. The key is to start early. If you have a 401 (k) program at work, find out when you are eligible to begin participating in the program. If you are not eligible, you may want to look at opening an IRA account (Roth or regular IRA). Ask your broker to explain to you the difference.
I would recommend talking to your financial advisor concerning which investment vehicle to fund first. You have many options: 1. 401(k), 2. Roth IRA, 3. Regular IRA, 4. Mutual Fund Account, 5. Savings Account, 6. Brokerage Account, 7. Certificates of Deposits, 8. Interest Bearing Checking Account, 9. Money Market Fund. The key to successfully funding your investing goals is start early and regularly funding your investment goal.
One tip I find useful is to have the funds automatically taken out of your paycheck or checking account. Start small,even $25 a month will add up quickly. As you continue to invest, add another $25 a month to your investing goals every three months. If you can afford more, start out with $100 - just make sure you can keep up the monthly contributions.
Keep accurate records and you will pay less out in taxes each year. By increasing your deductions on several things you will notice this at tax time.
This tip is a starting point for limiting your taxes. All the information is not included here due to space limitations. Always consult a professional before using a tax tip. These tips should be used to ask your CPA or investment advisor about.
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Last modified:
April 15, 2003