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Buttressing your resume with a new skill is one of the best ways to make a modest financial investment pay big returns. One study found that, depending on the skill and the worker's previous education and job, some holders of short-term (typically defined as taking 6-18 months) credentials earned 65% more than otherwise equivalent colleagues.
If you just need to learn a new skill, there are plenty of free options, including online classes available through your public library or on platforms such as Coursera, edX, FutureLearn, LinkedIn and Udemy. And many colleges offer free auditing opportunities to groups such as veterans or those over age 60.
SEE MORE How to Invest $1,000: Buy Fractional Shares (of Great Companies)
But if you want to prove to employers that you've really mastered a new skill, you'll need a certificate or credential program that requires you to pass proctored tests. Almost all of those come with a cost.
And just like any other investment, these are no slam-dunk. One recent study found that about half of the short-term credential programs accredited to award federal financial aid failed to increase earnings enough for students to recoup their costs within five years. And Credential Engine, a nonprofit that is monitoring the field, says that there are now more than 967,000 different credential programs - a number that can overwhelm prospective students.
The experts suggest winnowing by these three factors:
Field: A recent analysis of thousands of job postings by labor market analytics firm Lightcast
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Editor's note: This is part six of a seven-part series. It dives more deeply into the second strategy for defusing a retirement tax bomb, implementing asset location. If you missed the introductory article, you may find it helpful to start here.
Most investors have heard of asset allocation, but asset location is another story - and it could help investors with large tax-deferred savings reduce their tax bills in retirement.
SEE MORE When It Comes to Your RMDs, Be Very, Very Afraid!
Asset allocation refers to how a portfolio is allocated to various asset classes that have different historical investment returns and standard deviations. The simplest example is a stock-bond allocation, such as a 60% stock, 40% bond allocation, which is a common allocation for retirees. But there are dozens of more granular asset classes that can be managed as well, for example, U.S. large cap stocks or international small cap value stocks. Asset allocation is critical to effectively diversify your portfolio and reduce risk.
Asset location is different portfolio management strategy: one that few clients I meet have heard of. Few financial advisers implement it as well. Asset location seeks to minimize taxes by placing different asset classes in specific tax buckets (taxable, pre-tax, tax-free).
Putting Asset Location into Practice
In a nutshell, here's how asset location works:
Typically, you want to place investments with low expected returns, such as bonds, into tax-deferred accounts.Place investments with high expected returns, such as small value or emerging market st
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