The Financial Industry Regulatory Authority recently published a news release offering general financial guidance to the investing public. The FINRA Investor Education Foundation issued Five Do’s and Don’ts That Can Help You Achieve Greater Financial Security. According to its website, the FINRA Investor Education Foundation was established in 2003 and supports innovative research and educational projects geared to helping the portions of the investing public that could benefit from additional resources, such as seniors and military members.
According to FINRA, it created the tips based on findings from a study done by the FINRA Investor Education Foundation’s National Financial Capability Study. FINRA asserts that heeding the following tips can help investors achieve greater financial security:
Do use college and retirement methods that offer tax breaks – Coverdell Education Savings Accounts and 529 plans both offer tax advantages when setting aside money for your children’s college education. In the retirement arena, traditional 401(k) accounts are not subject to income tax withholding and are not considered as taxable wages. Earnings on Roth 401(k) contributions are tax-free.
Do payoff credit card debt as soon as you can – the FINRA study found that two out of five Americans surveyed thought that they had too much debt – regardless of their income level. The best way to avoid the never-ending cycle of credit card debt is to try to pay off credit cards in full in a timely manner.
Do check your credit report and credit score – even though consumers have the right to obtain a free credit report annually, FINRA suggests that you obtain your credit score as well, even if you have to pay for it.
Don’t chase higher returns – tempting as higher returns in this low yield environment may be, investors should not invest in non-traditional products that are riskier than their financial needs and goals allow, just to get a higher return than obtainable on more traditional investments.
Don’t be part of the 39% percent – According to FINRA, 39% of survey participants said they could not come up with $2,000 in the next month if they had to because of an unexpected situation like a major car repair. FINRA equates that to be “financially fragile.” Avoid being financially fragile by creating a rainy day savings account.
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