Investors are often concerned about minimizing transaction costs that can eat into their gains, without realizing that taxes can take an even bigger bite out of returns. Tax-aware investment management offers some protection. This is an active investment approach that aims to maximize after-tax returns. It relies on careful construction of a portfolio and proactive
Investors looking for an easy way to buy a diversified portfolio used to opt for mutual funds. Today, exchange-traded funds (ETFs) are an increasingly popular option offering several benefits. Both vehicles invest shareholders’ combined money in a broad set of assets, which provides the safety of diversification without the stress of buying and selling individual
It’s a sad fact of the tax code that the more money you make, the more you owe to the tax man. That’s especially true if you’re self-employed and paying the entire 15.3% Federal Insurance Contributions Act (FICA) tax for Social Security and Medicare yourself. Investing in real estate, however, can bring in extra income
There are many reasons why you might want to move your retirement savings to another account. Maybe you want to invest with a company with better performance. Maybe you changed jobs and want to bring past accumulations with you to a new plan. If you’re among the millions who lost a job as the economy
Since health savings accounts (HSAs) were introduced in 2004 as part of the Medicare Prescription Drug, Improvement and Modernization Act, they have surged in popularity as a flexible way for numerous Americans to reduce taxable income and save for future medical expenses. But since the IRS establishes new rules governing HSAs each year, it’s important
Saving for retirement in tax-deferred vehicles is a great way to reduce your tax burden today. But it’s also important to limit the tax bite out of your hard-earned savings later by creating a stream of tax-free retirement income. By most estimates, income tax rates will likely rise in the future. Current rates set in
As the costs of higher education continue to rise, many parents worry about how they will pay for their kids’ educations without requiring them to borrow staggering amounts in student loans. In order to save for future tuition expenses, some families use a tax-advantaged tool called a 529 plan. While 529 plans offer a variety
Converting a traditional Individual Retirement Account to a Roth IRA offers tax advantages in certain situations. It is most advantageous when you can pay any resulting income taxes without using funds from the traditional IRA. Contributions to Roth IRAs have already been taxed, so they grow tax-free. That means withdrawing from a Roth IRA after
You’ve been saving aggressively in an IRA or 401(k) plan for your whole career and you’re set up well for retirement. Or are you? If you’ve built up a large nest egg only or mostly in tax-deferred accounts, you may give up too much of your hard-earned savings to taxes when you begin withdrawing from
Roth IRAs are a great way to balance out your retirement portfolio with assets that can offer a tax-free source of income. Specific rules governing distributions that enhance tax breaks—and a growing list of exceptions to early penalty rules—make Roth IRAs a handy asset to have in your investment toolbox. The biggest and best-known advantage