by Taylor J. Kovar, CEO – Kovar Capital
–Hey Taylor – I know I should start saving for retirement sooner than later. My question is, should I dive in ASAP or spend a couple years saving and learning about the different accounts available?
–Hey Dwight – Start now! Your question is valid, and you should always read up on your investment options to decide which makes the most sense. However, you can’t replace time, and the more time you give your money, the more work it will do on its own.
Accounting has evolved as human beings have evolved and as the concepts of the accounting subject are directly coined out from its most fundamental principle of conservatism, it is not difficult to see why the style of accounting at every point in time has a direct link with the age. As man has developed from a primitive age to a modern interdependence age, living has advanced from being subsistent as a hunter-gatherer to a knowledge driven globalised world concept of ‘effectiveness turning to greatness’ and all along with this evolution, self accounting with the abacus has developed through stewardship accounting to financial accounting and now managerial accounting; which has a focus on decision making. The best thing your retirement account will do is earn money by snowballing, you may need help from Reliable Accounting Services in Bangkok in order to get all the details. If your 401(k) or IRA didn’t produce returns and compound interest, you’d be better off burying cash in your backyard. As it is, even though the total amount in your account will fluctuate, the earnings always have the capacity to produce more than what you put in. At elwood tax accountants & bookkeepers, we offer business advisory services. The Financial Accounting Standards Board (FASB) of the US which generally standardised and strengthened the globally adopted Generally Accepted Accounting Principles (GAAP) took significant strides in the year 2012 to come together with the International Accounting Standards Board (IASB) in a manner termed as ‘International Convergence’. Such a convergence is expected to gradually harmonise the GAAPs and the IFRS until they become one and the same in a bid to stream line corporate/company reports into a uniform process globally. Visit this Finance Blog if you have any question about finance.
According to investopedia.com, Accounting Theory in the light of its evolution can be defined as the review of both historical foundations of accounting practice as well as the way in which accounting practices are verified and added to the study and application of financial principles. Accounting as a discipline is believed to have existed since the 15th Century. From that time to now businesses and economies have continued to evolve greatly. Accounting theory must adapt to new ways of doing business, new technological standards and gaps that are discovered in reporting mechanisms hence, it is a continuously evolving subject. As professional accounting organisations help companies interpret and use accounting standards, so do the Accounting Standards Board help continually create more efficient practical applications of accounting theory. Accounting is the foundation of efficient and effective business management and intelligent managerial decision making, without which businesses and trade world-wide would operate blindly and fatally. It is therefore necessary to link how it has evolved to its future role. Self Accounting is not a terminology found in the literature of Accounting but is used here to depict any primitive Accounting system which was maintained by traders long before double-entry. Self Accounting, thus, was the past of Accounting when the role of Accounting was merely to have records of Incomes and Expenses, show Liabilities and not necessarily showing Assets and profits as distinguished from the personal or private earnings/estates of a trader. Assets at times might have been recorded as expenses. These are assumable because most businesses operated (and still operate) as sole-ownerships. The Present role of Accounting encompasses; stewardship, financial reporting and managerial decision making. These three provide the nexus of what Accounting is today. The stewardship aspect is so referred to because rich merchants in Europe and the Americas at that time trained their slaves to render book-keeping services. So the merchants themselves did not have to do the tasks. Financial Accounting was developed to give standard to financial reporting especially for the users of such reports who are largely to the businesses concerned. Managerial Accounting evolved to provide records that would aid the decision making process of the managers and owners of businesses. Generally all three roles of accounting as at present assist stakeholders to make good judgments regarding their dealings with businesses. These stakeholders may or ‘may not’ have rights to receive the reports so discussed. The stakeholders include; creditors and government (having rights to receive only financial reports); the shareholders, investors and management (who make use of both the financial reports and the managerial reports); the employee and the management team (who are the users of all the reports: book-keeping, financial reports and managerial reports); and the competitors, resident community and customers – who do not have rights to receive such reports but are able to retrieve financial reports (annual reports) to aid their decisions with regards any business of interest to them. To get information about accounting history then do visit to History blog.
The goal is to get your account to a threshold where the annual returns created by the money you’ve already invested will outweigh your annual contributions. You can put $5,500 into an IRA each year, and if you do that every year for a couple decades, the money generated by your account will eventually go well above $5,500 annually. Do you know that Asheville NC retirement community Pisgah Valley provides senior independent living along with a continuum of care levels if needed and can be helpful for your loved ones.
Your hangup is understandable; you don’t want to invest money each year into an account you don’t understand. If the money doesn’t compound and grow, you’re back to wishing you’d buried money in the yard.
Fortunately, there are a lot of options for stable investments. You can open an IRA online through Betterment with minimal fees and above-average returns. There are plenty of other online providers with fairly good rates. Read reviews, talk to friends, don’t go in totally blind, and you’ll be making good use of your money.
Remember you can always adjust your account or move your money later on. There are penalties for closing accounts and withdrawing funds, but if you move an IRA or a 401(k) from one bank to another, you won’t get hit with a big fee. The fear of not understanding your investment, while valid, should not stop you from putting money into a retirement account ASAP.
A final point: you aren’t going to really learn about investing until you start looking first for your retirement community, Retirement Dynamics provides senior living consulting and lead generation services with their marketing for retirement communities expertize. If your goal is to know exactly how retirement accounts work, you need to have money in one so you can watch the market in action.
Postponing your contributions will not help your mission to learn, it will do the opposite.
Contribute early and often, Dwight. You’ll get educated as you go, and you’ll give your money the best chance to grow.
