Don’t raid retirement accounts to pay for Johnny’s college Tapping into retirement accounts, even to pay for something as worthwhile as a child's college tuition, can be a bad move for clients, according to this contributed article on CNBC. That's because it's entirely possible that the client may be forced to retire earlier than planned and will need the savings to cover their living expenses. Also, investors will miss out on the power of compounding to grow their savings. Finally, taxes and penalties on early withdrawals can be steep, and complicated. Withdrawals from retirement accounts are added to other income, which can push the client into a higher tax bracket. But that's not all. Unless you are age 59½, or retired and older than age 55, you'll be hit with a 10% federal early withdrawal penalty when you pull the funds from your 401(k). Plus, some states tack on their own early withdrawal penalty, as California does with its 2.5% hit. --CNBC

How portfolio managers tackle asset allocation No matter what asset allocation clients use for their portfolio, they would still end up getting almost $23,000 from $10,000 worth of investments, according to discussions Morningstar's Investment Conference. But their experiences would vary because of the different volatility levels. Experts at the conference showed various approaches to creating target strategies and other multi-asset portfolios that could balance investor needs, goals, and risk tolerance. They reiterated the need for security selection and the option to customize asset allocation to suit the investors' goals. For example, investors may consider shifting to lower-risk dividend paying stocks as they approach retirement, says an expert. --Morningstar

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