Many people believe IRA stands for Individual Retirement Account, but it’s actually an Individual Retirement Arrangement, as outlined in the IRS tax code. An IRA isn’t an investment itself—it’s a tax-advantaged container you use to hold investments like mutual funds, CDs, stocks, and bonds. Depending on the type of IRA, your contributions and withdrawals are taxed differently:

• Deductible IRA: Tax-deductible contributions, taxable withdrawals.
• Roth IRA: No tax deduction upfront, but tax-free withdrawals later.
• Non-Deductible IRA: No tax deduction upfront; earnings are taxable at withdrawal. Contribution limits vary based on income, age, and marital status and are adjusted periodically by Congress.

Importance of Rebalancing Investment Portfolios

Rebalancing is a powerful strategy that ensures you’re buying low and selling high without trying to predict market performance. By periodically adjusting your asset mix, you can increase long-term returns and reduce risk. We rebalance our accounts based on past performance, a method that has proven successful and reliable.

Managing 401(k) Funds After Changing Jobs

When you leave a job, I recommend rolling over your 401(k) into an IRA. This avoids taxes and penalties, provides broader investment choices, and frees you from your former employer’s administrative constraints. IRAs also simplify future withdrawals and reduce management fees.

Gift Tax Exemption Rules

In 2025, you can give up to $19,000 per year to any number of individuals without triggering gift taxes. Couples can double that amount to $38,000 per recipient. Larger gifts up to $13.99 million per individual or $27.98 million per couple can be given tax-free under the unified credit provision, but this reduces the estate-tax-free amount for heirs. Ric also mentioned using trusts like Crummey Trusts to structure these gifts for future use.

Investing in Commodities

Commodities like gold, oil, and agricultural products can add diversification to your portfolio, but Ric recommends limiting them to no more than 5% of your holdings. These are high-risk, high-volatility assets best accessed through ETFs to reduce transaction costs and tax complexity.

Social Security and Retirement Planning

While Social Security isn’t going away, Ric warned it may become less generous over time. He urged attendees not to rely on it as a primary income source and to focus instead on personal savings and investment strategies. For 2025, the maximum monthly Social Security benefits are:

• Retiring at age 62: $2,831
• Full retirement age (67): $4,018
• Retiring at age 70: $5,108

College Financial Aid Strategies

Education reporter Kim Clark joined the session to discuss smart college planning. She emphasized affordability, advising families to apply to multiple schools to encourage competitive financial aid offers. She noted that some universities, like Carnegie Mellon, match aid from similar institutions. Kim also favored 529 plans over tuition prepayment plans due to the latter’s financial instability.

Leveraging Savings Programs Like Upromise

Upromise is a practical way to earn college savings by registering grocery and credit cards, earning small rebates on everyday purchases. Families can involve grandparents and friends to boost contributions. While this won’t replace a college fund, it can easily cover incidental costs like textbooks.

Retiree Regrets and Planning for Satisfaction

More than half of affluent retirees regret not planning earlier for a meaningful retirement. He stressed the importance of envisioning your ideal post-career life and saving with that vision in mind—not just to survive, but to thrive.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

The post Building Financial Success with IRAs, Rebalancing and College Savings appeared first on ROI TV.

Here are eight key money takeaways from their recent discussion that can help you build wealth more efficiently, avoid common traps, and make confident decisions about your financial future.

1. Stop Letting Mental Accounting Sabotage Your Finances

Ever felt better keeping money in savings even though you’re carrying credit card debt? That’s mental accounting—and it can cost you.

Ric Edelman gave a great example:

• Keeping $10,000 in the bank at 1% interest
• While paying 18% on a $10,000 credit card balance
• Net loss: 17%, just from choosing the “wrong” bucket

He also told the story of a Las Vegas gambler who justified an $8.4 million loss by saying, “I only lost five dollars.” This kind of thinking leads to irrational financial decisions.

Smarter move:

• Treat all money as part of one financial picture
• Pay off high-interest debt before saving in low-return accounts
• Avoid emotional thinking around money

2. Start with Clear Retirement Goals

Carol from Baltimore asked how to know if she’s on track for retirement. Ric’s answer:
Start with two questions:

• When do you want to retire?
• How much do you want to spend (in today’s dollars)?

Then work backward:

• Add up your current assets
• Calculate your monthly savings and expected returns
• Use that to see if your goals are realistic

If not? Adjust your timeline or your spending expectations—not your dreams.

3. Rethink Saving for Your Grandkids

Most people think about helping their grandchildren with college—but Ric suggested going even bigger:

• Invest $5,000 in a Roth or IRA-like vehicle (if available)
• Leave it untouched for 65 years
• That money could grow into hundreds of thousands—maybe more

Of course, the traditional route still works:

• 529 College Savings Plans allow tax-free growth for tuition, room and board, and more
• You control the account and can switch beneficiaries if needed

4. Avoid Overpriced Mortgage Life Insurance

Nikki from Florida wanted to protect her mortgage with life insurance. Ric explained that mortgage protection policies are usually a bad deal:

• The death benefit shrinks as the mortgage is paid down
• They cost more and offer less flexibility

Instead, a regular term life insurance policy is cheaper and more useful. It allows your loved ones to use the payout however they need—not just toward the house.

Tip: Always shop around and talk to a fee-only advisor before buying insurance.

5. Choose ETFs Over Mutual Funds

Why? Two words: lower fees.

Ric laid it out clearly:

• Average ETF fee: 0.3%
• Average mutual fund fee: 3.0%
• Difference: 2.7% per year—that’s money out of your pocket

ETFs also come with better tax treatment and transparency. They’re built similarly to mutual funds, but more efficient. For long-term investors, that’s a big win.

6. Make Saving a Non-Negotiable Habit

Maria Bartiromo didn’t mince words:
“The #1 mistake most people make is not saving enough.”

Her advice?

• Pay yourself first—every paycheck
• Start small if you have to, but be consistent
• Build a reserve so you’re ready for the unexpected

Savings isn’t just about wealth—it’s about peace of mind.

7. Ignore the Noise, Focus on Fundamentals

With so much financial news 24/7, it’s easy to get distracted by hype, predictions, or panic.

Maria says to ignore the noise and focus on:

• Company earnings and revenue
• Management’s stake and track record
• The value of the product or service

Meanwhile, Ric reminded us that the 1980s had too little financial info—and today we may have too much. The skill now is knowing what not to listen to.

8. You Can Compete with Wall Street—But You Have to Work at It

The internet and new platforms have empowered individual investors like never before. But Maria made it clear:
Success still takes discipline.

That means:

• Doing your homework
• Building a long-term strategy
• Avoiding get-rich-quick distractions

If you’re willing to invest the time, you can absolutely invest like a pro.

Final Thoughts: Think Long, Act Smart

You don’t need to be a financial expert to make smart money moves—but understanding your mindset, your goals, and your tools can make all the difference.

From skipping overpriced insurance to maximizing low-fee investments and saving early, the path to financial independence is paved with clarity and consistency.

Start now—and keep learning along the way.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

The post How to Think and Act Like a Financial Pro: Smart Habits for Wealth Building appeared first on ROI TV.