Saving your first $100,000 is a milestone worth celebrating. It is also the point where small financial decisions can start carrying much bigger consequences.
By now, your money may be spread across several accounts, such as a 401(k), IRA, brokerage account and high-yield savings account. As your savings grow, so does the value of getting the details right. For many investors, this is when professional financial advice may be worth considering.
1. A good adviser does more than add 3%
Many investors assume hiring an advisor is all about earning higher returns. In reality, much of an advisor’s value comes from helping you avoid costly mistakes.
A widely cited Vanguard Advisor’s Alpha study estimates advisors can add about 3% in net value over time. That figure is often misunderstood. It is not an extra 3% every year from picking better investments.
Instead, much of that value comes during periods of market turmoil. Advisors can help investors stick with their long-term plans rather than panic-selling after sharp declines, potentially improving long-term outcomes. SmartAsset matches you with a fiduciary advisor who builds around your goals. Built for serious investors with $100,000 or more in investable assets.
2. The IRS can tax gains you never spent
Where you hold your investments matters almost as much as what you own.
For example, actively managed mutual funds held in a taxable brokerage account can distribute capital gains at the end of the year. Even if those distributions are automatically reinvested, you may still owe taxes on the gains.
Choosing the right type of investment account for each investment may reduce unnecessary taxes and allow more of your money to stay invested.
3. Some investments are more tax-friendly than others
Not every investment is taxed the same way. Interest from corporate bonds and income from some real estate investments may be taxed at ordinary income rates when held in a taxable account. Qualified stock dividends, by comparison, often receive more favorable tax treatment.
An advisor may recommend keeping income-producing investments in tax-deferred accounts, such as a traditional IRA, while allocating more tax-efficient investments to taxable accounts. The IRS provides an overview of retirement accounts and their tax treatment.
4. Your portfolio can get out of balance over time
A portfolio that was well-balanced a few years ago may not stay that way.
If stocks significantly outperform bonds, your portfolio can gradually become more heavily invested in equities than you intended. That may leave you exposed to larger losses during the next downturn.
Selling appreciated investments to rebalance may also create tax consequences. An advisor may be able to reduce those taxes by using new contributions, withdrawals or other strategies to gradually restore your target allocation. Regular portfolio rebalancing helps keep your investment risk aligned with your goals.
5. Retirement withdrawals can raise your Medicare costs
The order in which you withdraw retirement savings can have lasting financial consequences.
Higher taxable income in retirement may increase the cost of Medicare through Income-Related Monthly Adjustment Amount, or IRMAA, surcharges. Those higher premiums can add up over time.
Planning withdrawals across taxable, traditional and Roth accounts may help keep income within important thresholds and avoid unnecessary healthcare costs. You can learn more about IRMAA on Medicare.gov.
A six-figure portfolio deserves a second opinion
SmartAsset matching process looks at things like your age, location, and financial priorities to pair you with an advisor who actually fits — no guesswork, no cold calls. The form takes about two minutes and covers a few simple questions about your goals, your timeline, and what you want your money to do.
Every advisor is a fiduciary — legally bound to prioritize your interests. If you have hit the $100,000 milestone, get matched for free and meet your advisor to discuss how to maximize your investments.
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