How consolidation can help you find financial peace

PHOENIX — Whether you are on the doorstep of retirement or in the prime of your career, it is important to be aware of your financial footprint so that market uncertainty doesn’t lead to undue stress.

The simplest first step to retirement planning is account consolidation.

Many people find themselves with several inactive 401(k) accounts or even maintaining a few IRA accounts. However, the wisest decision — and the one that leads to the fewest headaches — is to roll over existing accounts and maintain a single IRA account, according to Matt Dages, president and founder of Bright Wealth Management.

This rollover process, described as self-directed “in-service” by Dages, can be done whether you are currently employed by a company or haven’t been working for a company for many years. Once you completely roll over your accounts, new options will be unlocked such as potential tax-free growth through “Roth conversions.”

“For many people, consolidation is an easy fix,” Dages said. “I have people all the time that come in with their like banker’s box of (financial) statements, and that’s totally fine and normal. And we’re going to help you, you know, get organized and get started by consolidating.”

Branching off consolidation, strategic rebalancing can lead to a longer and more fruitful financial future.

Financial rebalancing, which Dages recommended people engage in on a quarterly basis, will help you avoid the extremes of overly aggressive and conservative investment allocations. Dages said many don’t touch their initial target date in their 401(k) fund after setting it and miss out on growth opportunities.

“A lot of those target-date funds, although they reset automatically, they’re really in some whacky investments,” Dages said. “And they’re really lopsided towards one sector or one side, whether it’s a lot of them are in long-term dated funds, which have gotten really beat up the last few years. … And then on the downswing, (target-date funds) actually took a big hit when there was market correction.”

Like designing a healthy eating plan, Dages encouraged diversifying your portfolio with the guidance of financial advisor. This will be beneficial for both improved market resilience and “future tax planning.”

Are gold and silver smart financial investments?

While physical financial assets such as gold and silver are often viewed as safer investments, Dages cautioned people of “pitfalls” that come with associated fees. For example, a prospective gold or silver investor may be told the value of their asset is worth one thing, but in reality, when they try to sell, it is worth significantly less than advertised.

With this pitfall in mind, it is important not to put all of your eggs into one basket.

“Gold can be just a little part of your large portfolio,” Dages said. “When you talk about diversification, it’s kind of like snowshoes. You want a big, giant, wide snowshoe to kind of get you through any (“snow”) and spread it out. So if someone wants to buy gold, you just list that as one of their assets and incorporate that into their plan.”

Always ask for a second opinion and consult your financial advisor to see if investing in physical gold or exchange-traded funds (ETFs) is right for you.

Schedule a complimentary one-hour portfolio review online or call 833-777-4296 to learn more about Bright Wealth Management.

The Bright Wealth Management Show with Matt Dages airs Saturdays from 1 p.m. to 2 p.m. and Sundays from 3 p.m. to 4 p.m. on 92.3 FM.