Internet Stock Exchange Investment Club

In today’s review of the first eight chapters of The Bogleheads’ Guide to Investing, I mention the importance of calculating your own net worth, and in the past I’ve mentioned how to calculate it.

But why is knowing your net worth important? What value does it have? Here are five reasons why you should calculate your net worth.

It provides a rule-of-thumb indicator of your overall financial health. This one number indicates your financial standing at the moment, for better or worse. How you interpret it is up to you.

IRA tax deductions are a little different, depending on which kind of IRA account you have. There are the traditional IRA's, Roth IRA's, and even self directed subtypes of the two. Knowing the various tax options with each is critical both in the short term and long term. Also, knowing your responsibilities for each kind of account is equally as important.

Traditional IRA

The great things about an IRA include the tax savings and the growth of your money. There are some things that not everyone likes though. Among the many things that some people do not like are the Roth IRA withdrawal rules that many people have to deal with. While the rules are detailed fairly well some individuals may have questions regarding the rules that govern IRA's. It is important to understand the rules prior to opening the account. You may find that some aspect of the Roth-IRA withdrawal rules are not quite what you expected.

Americans are infamous for not adequately saving for retirement. If you find yourself in this position, you need to start taking action immediately. For many people, this means looking to an individual retirement account, better known as an IRA.

We have talked about stocks, bonds, and cash. These are the tools you have to build wealth and diversify with if you choose. You can diversify in many different ways. A good investor makes sure to manage risk and always stay on top of their portfolio. You don't have to put all of your eggs in one basket. You can diversify.