I have often noticed that people spend valuable time worrying about things they cannot control. In the financial arena this includes trying to predict what the stock market is going to do in the next day, week or year, how fast China will be growing, what interest rates will do, what the price of oil and gold will be in the coming year. No one can accurately answer these questions. Therefore, obsessing on these matters is not a good use of our most valuable resource, TIME. In addition, it causes Analysis Paralysis, a pattern of over-thinking a situation so that a decision or action is never taken. Instead, I tell people to focus on the stuff you do have control of. This includes: making sure you have adequate cash reserves; reducing your debt levels; making sure you have adequate insurance to protect your loved one against unexpected events such as lawsuits, death, disability and unforeseen medical costs; making sure you have basic estate planning documents in place; making sure you have a diversified investment portfolio that matches your risk tolerance and goals; and proactively managing income taxes. These are the things you can control. You also have a say as to your health by what you eat and how much you exercise.
Looking at taxes, which is one of the areas we can control, recently President Obama signed the Consolidation Appropriations Act of 2016 into law. One of the areas the legislation addressed was the ability to take withdrawals out of your IRA accounts and distribute the funds directly to charity. If you are charitably inclined, this is a good way to go since it does not impact your adjusted gross income. Adjusted gross income is used to determine many things such as how much of your tax deductions you actually get to use and how much you pay for Medicare insurance. The law allows each person to withdraw $100,000 annually from their IRA and distribute it to charity. These distributions also satisfy the required minimum distributions that are required beginning at age 70 ½.
Make a commitment to address everything within your control that you have been putting off and be intentional about not worrying about the things you can’t. In the words of Winston Churchill, “Let our advance worrying become advance thinking and planning.”
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