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the advisor that my husband and I have been with for the past two years has given us some good tax advice that has helped him save more money into his tax-free account from his sole-proprietorship consulting type business...but he also talked us out of getting out of the market last may when I wanted to move mutual funds into fixed income or cash
so I am not very happy with him or us for not sticking with convictions
now I am seeing that he is basically just using the same portfolio of mutal funds/short term t-bill fund for our IRAs and taxed investment account as well as the sole-proprietorship account--just in smaller proportions...which to me seems to mean that he is taking the easy road and not doing any real thinking or spending any time on this...
is that really the "smart" way to allocate
aren't some things--because of how they are passed on to survivors and how you can withdraw funds during retirement--better done inside tax-free acounts and some types better done outside?
What is a good site/book to use for some general background/overview information about investing...not so much a get rich scheme but how to organize your investments with an eye to retirement and estate planning?
With an IRA or 401(k), you have to pay taxes on distributions, so yes, it still makes sense to invest in tax-advantaged investments like treasuries and municipal bonds. Now if we're talking about a Roth IRA, then you'd be an absolute ditz to invest in treasuries since you don't pay taxes on distributions anyway. In that case, it's better to get a brokered CD if you want to be conservative.
I wanted to know if it made sense to own real stock shares vs mutual funds in one or the other...
(I am starting to think that this is going to turn into another Medieval era with guilds--very specific companies are going to own their niche and be the ones that beat up all the others...) and I am considering how to do it most efficiently from a tax/inheritance standpoint...
It doesn't make much of a difference. Mutual funds tend to have high management fees, so I tend to avoid them, though they do provide a diversity that is very expensive to get in a stock portfolio because of all the commission fees. The main thing is that in an IRA/401k, the taxes you pay on dividends and capital gains will be deferred until redemption, in addition to being able to write off the contributions. This will be the case with either stocks or mutual funds.
I guess I don't understand what you mean by "write off the contributions"...if I buy $5K worth of Cisco out of personal funds (taxed income) I can't write that money off my income return...
If I hold the stock long enough and sell at a profit that becomes taxed at capital gains rate...
If you mean that any investment bought for an IRA or 401K plan is contributed tax-free---then yes, I get that...
investment vehicles like annuities when they are passed as part of an estate have their value taxed as regular income--which is one reason I don't really want to invest in an annuity eventhough it grows tax free like a 401K or IRA...
with individdual stock--their current value is what is passed along---not the accrued value of the stock since its purchase...
what I thought with some stocks prices so low, it would be good time to buy individual stocks and start to plan for heirship/inheritance...
Microsoft is going to be around for a long time and so will McDonalds and Coke...and EXXON...
so it seems like if you bought keepers that would be a smart, longtime plan--plus most of them pay a decent dividend...
I guess I don't understand what you mean by "write off the contributions"...if I buy $5K worth of Cisco out of personal funds (taxed income) I can't write that money off my income return...
If I hold the stock long enough and sell at a profit that becomes taxed at capital gains rate...
If you mean that any investment bought for an IRA or 401K plan is contributed tax-free---then yes, I get that...
Yes that's what I meant.
Quote:
investment vehicles like annuities when they are passed as part of an estate have their value taxed as regular income--which is one reason I don't really want to invest in an annuity eventhough it grows tax free like a 401K or IRA...
with individdual stock--their current value is what is passed along---not the accrued value of the stock since its purchase...
what I thought with some stocks prices so low, it would be good time to buy individual stocks and start to plan for heirship/inheritance...
Microsoft is going to be around for a long time and so will McDonalds and Coke...and EXXON...
so it seems like if you bought keepers that would be a smart, longtime plan--plus most of them pay a decent dividend...
There's always a certain element of risk, and when you're talking about holding for decades, you can get unlucky with even seemingly great companies like Enron or Bear Stearns and watch it all disappear.. this recession has turned me into a fixed income guy. But anyway, that's tangential.
the advisor that my husband and I have been with for the past two years has given us some good tax advice that has helped him save more money into his tax-free account from his sole-proprietorship consulting type business...but he also talked us out of getting out of the market last may when I wanted to move mutual funds into fixed income or cash
so I am not very happy with him or us for not sticking with convictions
now I am seeing that he is basically just using the same portfolio of mutal funds/short term t-bill fund for our IRAs and taxed investment account as well as the sole-proprietorship account--just in smaller proportions...which to me seems to mean that he is taking the easy road and not doing any real thinking or spending any time on this...
is that really the "smart" way to allocate
aren't some things--because of how they are passed on to survivors and how you can withdraw funds during retirement--better done inside tax-free acounts and some types better done outside?
What is a good site/book to use for some general background/overview information about investing...not so much a get rich scheme but how to organize your investments with an eye to retirement and estate planning?
He should have given you a risk tolerance quiz that would have at least determined somewhat what your risk/reward tolerance level was. Many of the large mutual fund websites like Fidelity have them in their retirement planning sections of their sites but they aren't definitive by ANY stretch of the imaginiation.
It might be worth it for you to get educated and handle your own investing. If you did it and just spent 15 minutes per day monitoring it which is WAY more than any financial planner will be spending, you'll probably do a MUCH better job than they will and you will not only get a better total return but you'll save the commissions, fees.
One big advantage of doing it yourself is that rather than parking your money in Mutual funds where you have no real control or ability to get in and out of the fund at the price you want to-- as you are limited to the market open and closing prices .
What could happen during a big stock market correction, if your money is stuck in a mutual fundpart of your position in the fund since you are limited to the getting whatever the value of the fund is at the close of the market that day. If you are in an exchange traded fund, as soon as you suspect the market is about to radically change, you can get OUT of that position (preserving your profits). You can even establish trailing stop losses that will automatically lock in your profits and get you out of your position as soon as the fund changes its trend. NONE of this control is available with a broker that invests your money in mutual funds.
You'll need to learn how to read charts and some basic technical analysis. You can get access to charts on free sites like finance.yahoo.com. You can find out what the ETFs are by doing searches. There are lots of people who have been trading/investing for decades who have their own websites who can teach you or even recommend trades. You can also spend thousands of dollars on an "education" from some overpriced investing schools. Save your money and go for the former. Go to the Bookstore and browse through the books in the business section. pick up a Money Magazine or Fortune or Barrons or Investors Business Daily. Before you know it you'll know enough to get started and do at LEAST as good a job as a "professional" financial advisor. Make sure you understand what types of investments you are getting into. Diversify. Don't put all your money in only one or a few places. Remember, knowledge is power.
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