Best Financial Advisors in West Hartford

Frequently Asked Questions

• Introduction

  There are many titles for financial professionals, so it's challenging to track what each one means. A financial advisor is probably the term you've heard most often. Financial advisor is a broad term for a professional who helps individuals or companies manage their finances, including investment choices. There are over 100 certifications that financial advisors can obtain.
  

  • Financial planners, wealth managers, and investment advisors are all financial advisors with different focus areas.
  • A financial planner helps an individual or a company make a plan to achieve long-term financial goals.
  • A wealth manager helps individuals maintain their wealth through various disciplines and services, such as taxes, estate planning, and investment advice.
  • An investment advisor offers investment advice and recommendations to individuals or organizations.
    

  There’s a misconception that you have to be extremely wealthy to use a financial advisor. In reality, they can be beneficial for people from any income level. Keep reading to find answers to the most commonly asked questions about financial advisors, so you know which type can fit your specific needs.
  

• Does your child need to file an income tax return in West Hartford?

  The Internal Revenue Service does not exempt anyone from filing a tax return based on their age, meaning that even if your child declared a dependent on your tax return in West Hartford, he/she needs to file his/her own tax return. If the dependent child earns an income over $12,400, has an unearned income of more than $1,100, or has a combination of earned and unearned income worth more than $1,100, then he/she needs to file an income tax return.

• How do you rebalance your investment portfolio in West Hartford?

  There are two ways to rebalance an investment portfolio in West Hartford. First, add new money to your portfolio. You can allocate the new money to assets or asset classes that have fallen. For instance, if bonds in your portfolio have fallen from 40% to 30%, it may be a good idea to purchase enough bonds to return to the 40% allocation. Second, sell your high-performing assets and buy more underperforming assets. Rebalancing your investment portfolio is a good practice and helps you evaluate if there is a need to make adjustments.

• Will you be able to save on taxes in West Hartford if you donate funds to charities?

  Donating to charities using funds directly from your Individual Retirement Account can help you save on taxes and support your favorite causes in West Hartford at the same time. Qualified Charitable Distributions are not taxed as an IRA custodian sends funds directly from the account to an eligible 501(c)(3) organization. Because the money does not enter your personal account, it can be excluded as taxable income. Aside from not being taxed, your chosen organization will also be able to make maximum use of your contribution.

• When can you withdraw money from a traditional IRA in West Hartford?

  In West Hartford, you can withdraw money from a traditional Individual Retirement Account once you turn 59 and a half years old without penalties or restrictions. Note that your deductible contributions and earnings will be taxed as ordinary income if you have contributed pre-tax dollars to your traditional IRA. This means that you now owe the taxes that you originally deferred. Regardless of your age, you can enjoy tax-deferred contributions as long as you have earned income. However, you need to start taking Required Minimum Distributions for the year you reach 73 years old.

• Can you withdraw from your traditional IRA in West Hartford without being penalized?

  Early withdrawals from a traditional Individual Retirement Account are subject to a 10% tax penalty, but there are some circumstances wherein individuals in West Hartford can withdraw early and not get penalized. If you die before turning 59 and a half years old, your beneficiaries may be able to claim your IRA without penalty. You can also take up to $10,000 toward the purchase of your first home from your traditional IRA and not get penalized.

• Are financial advisors worth it?

  Whether or not a financial advisor is worth it depends on your personal situation. If your finances are fairly straightforward, then you may be better off handling it on your own. But if you have substantial assets or a complex investment portfolio, then hiring someone to handle it for you can be well worth the cost.