For our clients, it is important that they invest wisely to increase their wealth. Dr. Rastogi can analyze the complete portfolio of a client and come up with a detailed step by step plan to diversify investments to reduce risks and increase the probability of growing wealth. There are many options that a client can choose to invest his savings for investments including,
- stocks (equity) of public corporations – A client can invest in Value or Growth or Technology or Blue-Chip stocks depending upon his/her risk tolerance. In general, stocks are very volatile investments and one needs to be careful in investing them. Depending upon the time horizon for investment, an option could be to invest in index funds. For long time investments, index funds have shown capital growth. However, it would be advisable to consult an investment advisor before one starts to invest in stocks. However, all growth in stocks may have tax consequences unless the investment is from retirement funds. Investments in equity will always result in capital gain or loss and will be taxed differently than the ordinary income or loss. A client must further understand that capital loss is limited to $3000 in a year and excess loss must be carried over for the future. So, equity gain or loss will directly impact personal tax preparation.
- Bonds – This is another alternative to our clients for investment planning. However, clients must be careful of the holding period of Bonds and the type of Bonds. Corporation bonds have risks as in the case of stocks. Bonds usually move in the opposite direction of interest rates. When the interests are low, Bonds are expensive and when interests are high, bonds are cheap. So, for investment in a long-term Bonds, one must consider the situation of interest rates in case a client has to sell them before maturity. In general, municipal Bonds have federal tax benefit. This will be considered in tax preparation.
- Real Estate – A client can also invest in real estate. This could be either commercial real estate or residential rental real estate. Again, as other investments, one must be careful with the time and location of real estate investments. If mortgage interest rates are low price of real estate will be high. Real estate investments will have a direct impact on tax preparation and tax savings.
- Money Market – This is the safest investment for a client but at the time of low-interest rates, there is no income gain in money market investments.
Dr. Rastogi has broad experience in advising clients in implementing the right investment strategy that could be a combination of above different investments depending upon a client’s risk tolerance, time horizon for investments, and personal goals. All the above investments will have tax consequences for a client for a tax savings. Investment planning is an important part of financial planning.