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Financial Decisions Aren’t All or Nothing

The middle ground makes sense for many of us

A lot of people think that most of their financial choices are all or nothing, meaning they’re limited to one course of action or another. Not true. Most financial choices don't require you to do either one thing or the other. Finding a middle ground is often more prudent. Consider these examples:

Hold or sell?
Investing can be scary, and you may be in a quandary about whether to sell a particular stock or mutual fund. If you’re in a dither, why not sell half now and half later? That’s what a lot of professional investors do to cut the risk of unloading all of a holding at too low a price.

Using a broker
You don’t need a full-service broker for every transaction. Why not use a low-commission broker — or even better a no-load fund company — to execute investment decisions that you’re comfortable making for yourself? Tap the expertise of a full-service broker when you require guidance and recommendations.

Roth IRA conversion
Roth IRAs have garnered more attention in 2010 because you can now convert your traditional IRA into a Roth regardless of your income level. The catch is that you have to pay taxes on the conversion today, rather than in the future when you withdraw the money. Many folks are reluctant to incur a big tax bill sooner than necessary. Perhaps converting part of the traditional IRA money into a Roth is the answer.

LTC insurance
Long-term care insurance can be prohibitively pricey, so it’s an area where compromise may be advisable. Rather than choosing between coverage with all the bells and whistles and going naked (insurance jargon for going without coverage), consider a basic policy that offers moderate protection at budget-friendly premiums.

Now or later?
The decision about when to collect Social Security is a particularly challenging one. Take the money at the earliest possible time, age 62, or wait until your normal retirement age? Depending on your employment situation and other available assets, it can make sense to start collecting your check somewhere in between.

All the information presented on AARP.org is for educational and resource purposes only. We suggest that you consult with your financial or tax adviser with regard to your individual situation. Use of the information contained in this website is at the sole choice and risk of the reader.

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