9 Wise Ways to Spend Your Tax Refund

So, you followed our tax advice and were able to maximize your 2017 refund. You’re off to a good start, but what good is a big refund if you don’t spend it wisely?

While it may be tempting to take that refund check to the mall and spend it on a fancy new toy, you will thank yourself later if you exercise restraint and invest this money.

Here are nine smart ways you can spend your tax refund this year:

1. Re-invest the money in a retirement account. Roth IRAs allow your money to grow tax-free and have no minimum required distribution, making them a popular choice.

2. Pay off some credit card debt. Pay off your accounts with the highest interest rates first.

3. Make an extra payment on your mortgage. If you are lucky enough to have no high-interest debts, consider putting your money towards your mortgage.

4. Build your emergency fund. Your emergency fund should be able to support up to six months’ worth of living expenses.

5. Put it towards your next big purchase. Whether you have a new car or home improvement project on the horizon, your tax refund can be used to pay off a significant chunk of it.

6. Use it on your insurance policy. Upgrade your policy or just pay next month’s premium, the choice is yours!

7. Invest in your career with additional training or an industry conference. You are your own biggest source of income, so it makes sense to invest in yourself.

8. Make a charitable donation. Doing the right thing just feels good, plus it can reduce your taxable income for next year.

9. Treat yourself. There’s nothing wrong with spending part of your tax refund on yourself. The key word is part: try to limit this spending to 10% or less of your total refund.

Whether you are looking to maximize your tax return, or just need advice on spending it wisely, the financial consultants at American Investment Planners, LLC are here to help. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

The Power of Compound Interest

What are the two words that every investor loves to hear? Compound. Interest.

Unlike simple interest, which is calculated only on the principle (amount of money you put in), compound interest accrues on the principle and your previously-earned interest. To put it simply, compound interest allows you to gain interest on your interest, thus creating a “snowball” affect with your money.

Some retirement accounts, such as Roth IRAs, allow you to earn compound interest on your investments. This makes it absolutely vital to start investing as early as possible in order to maximize your nest egg. No matter what stage of life you are in, the best time to start saving for retirement is now.

You may think that you don’t earn enough money to make a significant impact, but you are wrong. The amount of capital you start with is not nearly as important as when you start. Every year you push off investing can really hurt you in the long run.

To illustrate the power of compound interest, let’s take a look at two different investors: Ashley and Bill:

• Ashley opens her retirement account at the age of 25, and saves $5,000 every year through age 35. Her total contributions equal $50,000.
• Bill waits until age 35 to open his retirement account, but contributes $5,000 annually until age 65. His total contributions equal $150,000.

Now, who do you think ends up with more money by the time they both reach age 65? Assuming both earn a steady 7% return rate, here is what they end up with:

• Ashley’s final balance is $602,070.
• Bill’s final balance is $540,741.

Despite investing three times as much money as Ashley, Bill still ends up with less money because he waited longer to get started. This simple example illustrates not just the power of compound interest, but also why it is so important to start saving early.

Don’t wait any longer – speak with a financial advisor today about retirement. The consultants at American Investment Planners, LLC offer professional retirement planning services to individuals of all ages. Please call (516) 932-5130 to schedule an appointment with one of our advisors, or email info@americaninvestmentplanners.com.

How to Shop Smart for Your Next Car

Besides your home, your automobile is likely the biggest purchase you will make in your lifetime. Like anything else in life, there is a right way to shop for a new car, and a wrong way.

Follow these tips from American Investment Planners, LLC to shop the smart way, and save thousands of dollars doing it:

• Determine your budget. Before you embark on your car shopping journey, you need to figure out how much you can afford to pay. Our online car affordability calculator is an easy-to-use, interactive tool that can help determine your ideal price point in just a few seconds.

• Explore your options. Don’t mentally commit yourself to anything too early in the buying process. Get the most out of your money by exploring your options. Compare different car makes and models, dealerships in your area, new vs. pre-owned, etc.

• Secure the loan before the car. The dealership isn’t the only option you have for a loan. In fact, many times it is the worst option. Shop around various banks, credit unions, and other financial institutions and get pre-approved for a car loan before heading to the dealership. Bring this information to the salesperson and see if they can match (or exceed) your other financing offers.

• Know the final price tag, and what it includes. One of the trickiest parts of car shopping is the extra charges and fees added throughout the process. What looks to be an affordable car can quickly exceed your budget after taxes, dealership fees, and the like. It is important to know not only the final price, but what the price includes. Some dealers will include perks such as an extended warranty, roadside assistance, or free oil changes for a year.

• Strike while the sales are hot. If you can afford to wait, don’t shop until the end of the model year – which typically starts around September. Dealerships need to make space for their incoming inventory, which translates into big time savings for the buyer. The holiday season (Black Friday through New Year’s) is also a good time to shop.

Budgeting for a new car can be difficult, but it’s not impossible. The financial consultants at American Investment Planners, LLC have decades of experience helping individuals and families just like you plan for life’s biggest expenses.

To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Good and Bad Financial Resolutions to Make in 2017

Thinking of what New Year’s resolutions you should make 2017? You’re not alone. It is estimated that over half of all Americans make New Year’s resolutions, but only 8% actually succeed.

Why is this? More times than not, the cause of failure is due to the goal itself. Whether it is too vague, immeasurable, or unrealistic, setting bad goals doesn’t give us a chance to succeed.

Confused? Not to worry. Here are five examples of bad financial resolutions, and how you can make them good:

Bad goal: “Pay off my debt”

Good goal: “Pay $___ towards my debt every month”

Paying off your debt isn’t necessarily a bad goal, it is just too vague. You are much more likely to accomplish something if you put a quantifiable number on it. If you truly want to get out of debt, make sure your goal includes a deadline and a set monthly dollar amount that accommodates your current financial situation.

Bad goal: “Save more money”

Good goal: “Add one month’s pay to my emergency fund”

In a perfect world, your emergency fund should cover you for a full year without pay. If you aren’t there yet, focus on chipping away little by little. Adding one month’s of pay to your emergency fund only requires you to set aside 8.3% of your monthly paycheck, which is attainable for most people. If you don’t have an emergency fund, make it your goal to start one.

Bad goal: “Make more money”

Good goal: “Send out two applications per week until I find a higher-paying job”

Everyone wants to make more money, but we aren’t going to pull it out of thin air. Instead, consider what tangible actions you can take to make this dream a reality. One obvious way to boost your salary is by finding yourself a job that pays more.

Bad goal: “Achieve a perfect credit score”

Good goal: “Boost my credit score by 20 points”

It is estimated that less than 1% of Americans have a perfect credit score. Instead of shooting for the stars, aim for something a little more realistic. Boosting your credit score by 20 points is certainly feasible in twelve months’ time, no matter your starting point.

Bad goal: “Plan for retirement”

Good goal: “Open an IRA or 401(k) account”

You’re never too young to think about retirement. On the contrary, the earlier you start planning and preparing for it, the more likely you will achieve it by your desired age. Make it a goal to open an IRA account or 401(k) this year. If you already have both, aim to increase last year’s contributions by 5% or more.

If you are struggling to set or achieve your financial goals, let the professional advisors at American Investment Planners help. We offer financial planning, advising, and investing solutions to clients of all ages and incomes. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Connect With American Investment Planners on Social Media!

At American Investment Planners, LLC, we are dedicated to helping our clients achieve all of their financial goals. In order to do this, it is important to provide them with the information they need to make educated decisions. This includes relevant industry news, objective insights, and tips from our trusted team.

One way we do this is through face-to-face meetings. When we sit down with our clients, we listen to them – about their financial situation, investment philosophy, and short- and long-term goals – before ultimately designing an individualized portfolio to meet their needs.

Unfortunately, we can’t meet with all of our clients every day of the week, and the world of finance is always changing. This is why we also take to the world of social media; to make this information and insight easily accessible for when you need it most.

We are currently active on a variety of social media platforms, and we would love to connect with you. You can find us on:

• Facebook
• Twitter
• LinkedIn
• Google+

After reading through our blog and social media pages, you may still have questions regarding your personal finances and investments. We are happy to help. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

How to Holiday Shop on a Budget

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

‘Tis the season to spread holiday cheer – more times than not in the form of gifts. Contrary to popular belief, it is possible to cross everybody off your shopping list without breaking the bank. Just follow these smart shopping tips from your friends at American Investment Planners, LLC:

• Start saving early. Many banks offer holiday savings accounts that allow you to deposit money year-round specifically for holiday shopping. It may be too late to take advantage of this holiday season, but it is never too early to plan ahead for future years.

• Make a list, and check it twice. The best way to stay on budget is by making a detailed list for all of your gift recipients. Your list should include a strict spending limit for each family member and friend. Keep a running log of your expenses to make sure you stay within your budget.

• Take advantage of all the deals. There is no shortage of savings during this time of the year. From Black Friday doorbusters to Cyber Monday markdowns, make sure you are taking advantage of the best deals available.

• Shop online. Save time, effort, and gas by doing your holiday shopping online. Many retailers even offer free shipping during this time of the year, allowing you to be as cost-efficient as possible.

• Don’t fall for store credit cards. Many retailers offer their own credit cards, and entice consumers to sign up by offering 10% off their initial purchase. While this may seem like a good deal, resist the urge. These perceived savings will quickly disappear if you do not pay your balance in full each month.

• Do it yourself. Tap into your inner creativity and take the DIY approach to your gifts. They may take a little more time, but they will save you money and are sure to be appreciated more than a store-bought product.

American Investment Planners, LLC helps families all over the country better manage their finances. From college savings, to estate planning, to retirement planning, and more, we can help you meet your short- and long-term financial goals.

To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Why is Diversification Important?

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Investing is a financial strategy that many people choose to help them achieve their short and long term goals, and the people who experience great success with doing so don't just become pros over night - there's a lot of research to be done and a lot to understand about the process, especially when it comes to risk.

Put simply, nearly every investment out there has some kind of risk associated with it - this is only natural, as the stock market rises and falls all the time. With that said, regardless of what you decide to invest in, you have to consider what kinds of risks are associated with that investment in particular.

This is where diversification comes in. In order to be a successful investor, you must be able to manage your risk while also maintaining your potential to experience returns. To do so, one thing that is often recommended is to diversify.

Ultimately, diversification is an investment strategy that is geared towards managing risk by spreading your money across various investments, such as stocks, bonds, real estate and cash alternatives. By having a diverse portfolio, you aren't putting all of your eggs in one basket, which helps in situations where you experience loss in a particular investment.

So why is diversification important?

Overall, diversification really helps to offset any negative experiences you have with any one investment. For example, if you have one investment that decreases really quickly but another that increases at the same rate, you'll likely have much more peace of mind and you may not even be too impacted by the decrease if another investment improves significantly. Additionally, having a diverse portfolio really helps in riding out market fluctuations, and can provide you with a more steady performance regardless of the current economic conditions.

With all that said, no matter where or how you choose to invest your money, we think it's important that you always keep diversification in mind - at the very least, it will probably make you feel much more comfortable with your efforts!

Here at American Investment Planners LLC, we are staffed with some of the top investing professionals and would love to work with you on your portfolio to ensure it's designed to meet your financial goals. To set up an appointment with an advisor, please call (516) 932-5130 or email info@americaninvestmentplanners.com today.

Above information courtesy of Emerald Connect.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

The Key to Having a Great Credit Score

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Having a great credit score is certainly something you want to accomplish for your own peace of mind and success, but truth is, you need a great credit score for a lot more reasons than that - one of the biggest reasons is to get the best offers when shopping for a mortgage. Now, while building credit does take time and requires hard work and patience, there is one strategy in particular to focus on immediately (according to time.com's Money, 3 out of 4 people with excellent credit do this). And what is that strategy? Paying your balance in full.

Despite the fact that many people believe you should carry a balance from month to month, research suggests that when you pay your balance in full instead, you're likely to see better results - data explains that 73% of consumers that boast a FICO credit score of 800 do, in fact, pay off their credit cards in full each month. 

So why is paying your balance in full the best approach?

Well, the amount of money that you owe plays a pretty significant role in determining your FICO credit score - in fact, 30% of your score comes from this. When coming up with that aspect of your score your credit utilization ratio is looked at, which would be the percentage of credit that you're using - keep in mind that the key is to really have access to open credit, rather than actually using that credit. Tip: try not use more than 30% of your available credit, as your credit score will typically drop when you go above this threshold.

If you're looking for ways to improve your credit score and are someone that usually carries a balance each month, now is the time to start paying things in full. However, since we know this can be difficult, here are two easy tips you can follow as you begin:

1. Stop using that credit card. It would be pretty hard to get your balance to be $0 if you continue to charge things each month, so while you work on paying down your debts, avoid using that card in its entirety.
2. Re-evaluate your budget. When was the last time you really analyzed your spending habits? If it's been a while, chances are you can find a ton of places where you can cut back on spending, which would give you extra money to use towards your debts.

Have more questions about achieving a great credit score? As a trusted financial planning firm, we can assist you with various aspects of financial planning, as well as answer any other questions you may have on financial topics.

To speak with one of our advisors, please give us a call at (516) 932-5130 or email info@americaninvestmentplanners.com.