Investing for Retirement with Gaurav Sharma
Today is the third Friday in April and in case you didn’t know, April is Financial Literacy Month or what we like to call our favorite time of year at The Financial Gym. An entire month that’s focused on the importance of financial literacy. I always say that financial literacy is just as important as regular literacy and while there are so many resources for us out there to get better at it, I still feel as though we have a financial literacy crisis in the US.
Every day new clients come to the Financial Gym feeling shame that they aren’t as adept in their personal finance knowledge as they think they should be and my response is always the same: ‘Why should you feel confident?’ Most of us didn’t learn about personal finance at home, at school or on the job, yet the second we start receiving paychecks, we’re responsible for managing our money and navigating the world of personal finance. This week on the podcast, I’m addressing a particular area of finance that our clients find the most challenging.
Today we’re talking about retirement planning and joining me is Gaurav Sharma, founder and CEO of Capitalize to discuss not only the importance of investing for retirement but how we can do so efficiently and not pay extra fees along the way.
What are we drinking?
Gaurav Sharma - Let’s pretend to be drinking whiskey
Shannon - Black Cherry Schweppes
Podcast Notes
Gaurav’s dad was an entrepreneur, so from a young age business was discussed in the household. His interest in finance led him to work in investment banking. His work involved advising companies for a long time, but he wanted to shift his focus. His interest in retirement savings combined with a desire to serve people ultimately led him to start Capitalize. Capitalize is a retirement savings platform that makes sure your money moves to the best place for you. They manage your entire rollover from start to finish.
Before saving for retirement, it’s important to have a balanced approach and ensure your other financial goals are taken care of first.
Investing for Retirement
The only thing that beats inflation over time is the stock market.
There are different investment options to consider: 401k plans, IRA’s, Roth IRA’s, and SEP IRA’s are some of the most popular.
Which is best will depend on your income, goals, and workplace options!
Employer-sponsored 401k plans are a popular option and have great benefits.
Advantages of 401k plans:
The money is taken out of the paycheck before we see it.
The contributions are tax-deferred.
There is often a company match available.
Disadvantages of 401k plans:
People change jobs every 3-4 years.
401k plans are different from employer to employer.
You have less control than other types of accounts.
Legacy 401K accounts:
These are accounts forgotten or left behind when switching employers.
It becomes difficult to keep track of how much money is invested, where it is allocated, and the fees associated with the account.
Benefits of rolling legacy accounts into an IRA:
There is often a more clear fee structure
It is easier to manage asset allocation.
Account management is simplified when everything is in one place.
Future 401k accounts can be rolled into the same IRA
They usually offer a more digital and accessible user experience.
Working with Capitalize
Historically, the process of rolling money over from a 401k to another retirement vehicle is complicated. The process is analog and each firm has its own rules.
Capitalize aims to digitize the process and help clients in an online way.
They help you find legacy 401k accounts. You tell them the employer, and they’ll find the institution associated with the account.
They work with you to decide which kind of retirement account is the best fit for your needs.
Their dedicated services team will walk you through the process of moving the money from the old account into the new one.
Takeaway: My biggest takeaway is that we all work hard for our money, we take the time to make sure it’s invested in a retirement account and we should also take the time to make sure we’re not losing that hard-earned money to unnecessary fees in retirement accounts.
Random Three Questions
If you weren’t a founder, what would you be doing?
What is your favorite show to binge right now?
If this was your last meal on earth, what would it be?
Check out Capitalize
Instagram: @hicapitalize
Website: https://www.hicapitalize.com/
If you have any topics you would like me to cover on this podcast, or if you’d like to get in the financially naked hot seat, I encourage you to email me at Shannon@fingyms.com, or join the private Martinis and Your Money Facebook group, and let me know what you want to hear.
The Financial Gym has so many ways that you can work with us. If you’re looking for a career shift, we’ve started a Financial Trainer Certification Program where you can have the greatest job in the world. We have online courses for you to learn on your own. If you’re looking for financial products like a new credit card or high yield savings account, we have all of our favorites on the BFF Approved Products Page. And finally, if you want one-on-one coaching with a compassionate and empathetic person, our Financial Trainers are here to help you and remember, Martinis and Your Money listeners get 15% off of one-on-one Financial Training at The Gym. We’re here to meet you wherever you are on your financial health journey.