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Show IRA is the cornerstone of successful retirement plan By PAMELA A. NICHOLS financial Consultant Shearson Lehman Hufton . The Individual Retirement Account Ac-count (IRA) remains the cornerstone of any successful retirement plan despite a new tax law that limits or eliminates deductions deduc-tions for IRA contributions. Funds deposited in an ERA will continue to grow tax-deferred; thus, an IRA is an important asset builder and investors in-vestors should continue to make their maximum annual contributions. contribu-tions. However, the new law underscores the fact that an IRA alone probably will not support the retirement lifestyle many 'people desire. To build a substantially larger retirement fund, investors are urged to re-evaluate their IRA investments, in-vestments, then supplement them with other carefully selected tax-advantaged tax-advantaged investments. Start by getting a fix on the investments in-vestments most appropriate for your IRAr-generally those offering safe, long-term capital appreciation. The following should be considered for your IRA: Stocks can be-excellent capital . builders. Stocks often pay quarterly dividends that can be reinvested and compounded on a tax-deferred basis. Capital appreciation stocks, ' on the other hand, typically offer above average potential for growth. Fixed income securities, such as corporate bonds, normally provide prov-ide high yield and range from speculative to very safe, while mortgage-backed securities offer high yield, safety and liquidity. Mutual funds offer a broad array of opportunities, and exchanges among a family of funds (those offered by the same investment in-vestment firm), are not taxed within an IRA. Zero coupon bonds can be purchased pur-chased so that maturities match your own retirement timetable. These bonds' offer comparative safety and growth, and, when held in an IRA, arc tax-deferred. Also consider unit trusts, fixed portfolios that could give you good income coupled with the safety of diversification. Another investment, the limited partnership, which often is secured by property, could provide pro-vide substantial income, as well as a continuing flow of income. Your IRA will make a good foundation for the future but may fall short of meeting your needs. To gain additional tax advantages and build a substantially larger retirement retire-ment fund, supplement your IRA with a thoughtfully selected mix of these tax-advantaged investments: Tax-exempt mutual funds are logical chokes for a supplemental account because they are often free of federal, state and local income tax, and some automatically reinvest gains. Zero coupon municipal bonds offer tax-free capital appreciation through a "locked-in" reinvestment reinvest-ment rate and semiannual compounding. com-pounding. Single premium life insurance plans allow you to deposit a single premium (normally not less than $3,000), accumulate earnings tax free, receive tax-free cash flow and also leave an income tax-free benefit to your heirs. Tax-deferred annuities, issued by major life insurance companies, are tax-favored savings plans that offer both fixed and variable tax-deferred tax-deferred rates of return. These annuities an-nuities can produce a guaranteed lifetime income. Don't overlook the tax-exempt unit trust, such as a fixed, diversified diver-sified portfolio of municipal bonds that could provide tax-free monthly interest payments. Investigate, too, the tax-advantaged limited partnership, partner-ship, which also offers the possibility possi-bility of tax-protected returns. Your choice Of investments will depend on your retirement objectives. objec-tives. Discuss your needs with your financial consultant to help insure . . the level of retirement income you -want . |