Retirement Planning
Expert-defined terms from the Certificate in Private Wealth Management and Family Offices course at London School of Planning and Management. Free to read, free to share, paired with a globally recognised certification pathway.
Accumulation Phase #
Accumulation Phase
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The accumulation phase is the period during which an individual saves and invest… #
This phase involves making regular contributions to a retirement plan, such as a 401(k) or an IRA, and allowing those contributions to grow over time through investment gains. The goal of the accumulation phase is to build a sufficient nest egg that will provide financial security during retirement.
Annuities #
Annuities
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Annuities are insurance products that provide a guaranteed income stream during… #
Annuities can be immediate or deferred, fixed or variable. Immediate annuities provide income right away, while deferred annuities allow the accumulation of funds before payouts begin. Fixed annuities provide a guaranteed rate of return, while variable annuities offer the potential for higher returns based on the performance of underlying investments.
Asset Allocation #
Asset Allocation
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Asset allocation is the process of dividing an investment portfolio among differ… #
The goal of asset allocation is to balance the risks and rewards of different investments to meet the investor's financial goals and risk tolerance.
Bonds #
Bonds
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Bonds are debt securities that companies and governments use to raise capital #
When an investor purchases a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the eventual return of the bond's face value. Bonds are generally considered less risky than stocks but offer lower potential returns.
Certificate in Private Wealth Management and Family Offices #
Certificate in Private Wealth Management and Family Offices
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The Certificate in Private Wealth Management and Family Offices is a professiona… #
The program covers topics such as investment management, tax planning, estate planning, and family governance.
Diversification #
Diversification
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Diversification is the practice of spreading investments across a variety of ass… #
By investing in a diversified portfolio, an individual can potentially achieve higher returns with lower volatility than by investing in a single asset class or security.
Estate Planning #
Estate Planning
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Estate planning is the process of arranging for the transfer of an individual's… #
Estate planning involves the creation of legal documents, such as wills and trusts, to ensure that assets are distributed according to the individual's wishes and to minimize taxes and administrative expenses.
Financial Planning #
Financial Planning
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Financial planning is the process of creating a comprehensive plan to manage an… #
Financial planning involves assessing an individual's current financial situation, identifying financial goals, developing a plan to achieve those goals, and implementing and monitoring the plan over time.
Individual Retirement Account (IRA) #
Individual Retirement Account (IRA)
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An Individual Retirement Account (IRA) is a retirement savings plan that allows… #
Contributions to a traditional IRA may be tax-deductible, and earnings grow tax-deferred until withdrawn. Roth IRAs provide no tax deduction for contributions, but earnings and withdrawals are tax-free if certain requirements are met.
Investment Management #
Investment Management
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Investment management is the process of managing financial assets, such as stock… #
Investment management involves the creation and implementation of an investment strategy, the selection of securities, and the monitoring of performance.
Mutual Funds #
Mutual Funds
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A mutual fund is a professionally managed investment vehicle that pools money fr… #
Mutual funds offer investors the benefits of professional management and diversification, but may also charge fees and expenses.
Pension Plans #
Pension Plans
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Pension plans are defined benefit retirement plans that provide a guaranteed inc… #
Pension plans are funded by employers and may be insured by the Pension Benefit Guaranty Corporation (PBGC).
Portfolio Management #
Portfolio Management
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Portfolio management is the process of managing an investment portfolio to achie… #
Portfolio management involves the creation and implementation of an investment strategy, the selection of securities, and the monitoring of performance.
Private Wealth Management #
Private Wealth Management
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Private wealth management is the provision of financial services to high net wor… #
Private wealth management involves the management of financial assets, tax planning, estate planning, and family governance.
Retirement Plan #
Retirement Plan
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A retirement plan is a savings plan that provides financial security during reti… #
Retirement plans may be employer-sponsored, such as 401(k) plans, or individual, such as IRAs. Retirement plans may be funded with pre-tax or after-tax contributions and may offer tax advantages.
Risk Tolerance #
Risk Tolerance
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Risk tolerance is an individual's willingness and ability to accept investment r… #
Risk tolerance is a key factor in the creation of an investment portfolio and should be assessed regularly to ensure that it is appropriate for the individual's financial goals and circumstances.
Roth 401(k) #
Roth 401(k)
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A Roth 401(k) is a retirement savings plan that combines the features of a tradi… #
Contributions to a Roth 401(k) are made with after-tax dollars, and earnings grow tax-free. Withdrawals are also tax-free if certain requirements are met.
Stocks #
Stocks
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Stocks are equity securities that represent ownership in a company #
When an individual purchases a stock, they become a shareholder and are entitled to a portion of the company's profits. Stocks are generally considered riskier than bonds, but offer the potential for higher returns.
Tax #
Deferred Growth
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Tax #
deferred growth is the growth of investments on a tax-free basis until withdrawn. Tax-deferred growth is a feature of retirement plans, such as 401(k) plans and IRAs, and can help to increase the value of investments over time.
Tax #
Efficient Investing
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Tax #
efficient investing is the practice of managing an investment portfolio to minimize tax liabilities. Tax-efficient investing involves the use of tax-advantaged accounts, such as IRAs and 401(k) plans, and the selection of investments that generate low taxable income.
Wealth Management #
Wealth Management
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Wealth management is the provision of financial services to individuals and fami… #
Wealth management involves the management of financial assets, tax planning, estate planning, and family governance.
401(k) Plan #
401(k) Plan
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A 401(k) plan is a retirement savings plan sponsored by employers that allows em… #
Contributions to a 401(k) plan are made with pre-tax dollars, and earnings grow tax-deferred until withdrawn. Withdrawals are subject to income tax and may be subject to a penalty if taken before age 59 1/2.
529 Plan #
529 Plan
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A 529 plan is a college savings plan that provides tax advantages for higher edu… #
Contributions to a 529 plan are not tax-deductible, but earnings grow tax-free and withdrawals are also tax-free if used for qualified education expenses.
Rollover #
Rollover
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A rollover is the transfer of funds from one retirement plan to another #
Rollovers are typically used when changing jobs or retiring, and allow individuals to maintain the tax-advantaged status of their retirement savings.
Required Minimum Distribution (RMD) #
Required Minimum Distribution (RMD)
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A Required Minimum Distribution (RMD) is the minimum amount that must be withdra… #
RMDs are calculated based on the individual's life expectancy and the balance of their retirement account. Failure to take an RMD can result in a penalty.
Asset Protection #
Asset Protection
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Asset protection is the use of legal and financial strategies to protect persona… #
Asset protection may involve the use of trusts, business entities, and insurance.
Charitable Giving #
Charitable Giving
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Charitable giving is the act of donating money or other resources to charitable… #
Charitable giving can provide tax advantages, such as a charitable deduction, and can also support causes that are important to the donor.
Concentrated Stock Position #
Concentrated Stock Position
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A concentrated stock position is a large holding of a single stock or a #
A concentrated stock position is a large holding of a single stock or a