Posts by Eric Reed
Investing
How to Create a Dividend Investing Strategy
Unlike capital gains investing, wherein a portfolio generates money when you sell its underlying assets, income investing involves generating income by holding dividend-paying stocks. Income investing can be a good way to generate compounding returns with the goal of living off your dividends without diminishing your capital. However, dividend investing also tends to generate lower… read more…
Investing
Residential Real Estate Investment Options
Real estate can be a good way to diversify your portfolio. There are several ways to access this market, depending on your capital and risk tolerance. Residential real estate can be capital intensive, but can also be potentially lucrative. Buying, selling and renting property can be big business, even at a relatively small level. Even retail… read more…
Taxes
How Capital Gains Tax on Home Sales Works
If you sell your home for a profit, the IRS considers this a taxable capital gain. This rule applies to all home sales, including vacation or investment properties. However if you sell your primary residence, you may be able to exclude $250,000 of gain per individual from your taxes. As a result, in most cases,… read more…
Investing
History of Amazon: Company and Stock
Amazon is a Seattle-based retailer and technology company primarily involved in e-commerce, cloud computing (Amazon Web Services), digital streaming and artificial intelligence. It owns dozens of diversified subsidiary companies, with large investments in others. Amazon’s stock is listed on NASDAQ under the ticker symbol $AMZN and is part of the S&P 500 index. Here’s what… read more…
Retirement
Should I Take a $200,000 Lump Sum or $1,850 Monthly Payments for My Pension?
If you have a pension, your employer will usually give you a choice at retirement: buyout or payments. It’s important to review this carefully. In broad terms, many make this choice based on expected lifetime returns. If you take and invest the buyout, what can you reasonably expect in portfolio returns? How will that expectation… read more…
Investing
History of NVIDIA: Company and Stock
NVIDIA makes computer processors. The company started out, primarily, in the video game and graphic design market. In the late 1990s and early 2000s, it was known mainly as a leading company in the relatively niche high-performance gaming industry. Today, it is one of the biggest tech companies in the world with a market cap… read more…
Financial Advisor
How to Use the Double Consolidation Loophole for Student Loans
The double consolidation loophole is a way for parent borrowers to make their loans eligible for the improved repayment terms available under the Biden administration’s SAVE program. This can lower monthly payments for a qualifying household significantly, as the SAVE program offers more generous income-based repayment options than Parent PLUS Loans. However, the window of opportunity… read more…
Retirement
I’m 65 With $800k in an IRA. Should I Convert $100,000 Per Year to a Roth to Avoid RMDs?
Converting to a Roth IRA can be tricky business. For the right household, this is an excellent way to save money on retirement taxes. A Roth portfolio generates untaxed income, letting you keep more of your portfolio and Social Security. It also has no required minimum distributions (RMDs), maximizing your financial flexibility. But remember that… read more…
Advisor Resources
How to Implement Goals-Based Financial Planning
As a financial advisor, there are any number of strategies for helping your client to build wealth. One of the most useful is called goals-based financial planning. This is the practice of organizing your client’s plans around specific financial goals and milestones. It’s particularly useful because this is how many households think about their own finances.… read more…
Investing
Types of Alternative Investments for the Wealthy to Consider
For some people, “wealthy” can mean simply meeting their household needs. For others, maybe it’s holding enough money and assets to be considered a sophisticated investor. Whatever your definition of wealth, once you have your future secured through steady, long-term assets, you can choose to explore alternative investments for your investment portfolio. Alternative investments encompass anything… read more…
Retirement
We’re 60, Have $1.3 Million in 401(k)s and Will Receive $5,100 Monthly From Social Security. What’s Our Retirement Budget?
At its most basic, creating a retirement budget is all about money in vs. money out. You figure out what kind of income you can reliably generate from your combined assets, then compare it against your household spending. If income surpasses spending, you’re set. If not, you need to make some adjustments. Need help creating… read more…
Retirement
I Have $640k in an IRA and Will Get $1,900 in Social Security. Can I Retire at 65?
How old are you? When it comes to evaluating your retirement options, this might be the single most important question in finance. Your age will determine how close you are to needing this money which, in turn, will change almost everything about how you evaluate your taxes, returns and other options. For example, say that… read more…
Investing
How Automated Investing Works
Automated investing is the practice of using algorithms to automatically manage your portfolio. It’s a relatively new tool with investing, and is typically used to build long-term, passive portfolios. There are several benefits to automated investing, particularly given that these systems can often build well-indexed portfolios with lower fees than a legacy mutual fund or… read more…
Retirement
Rollover IRA vs. Roth IRA
With a rollover IRA, you transfer money from a 401(k) or other employer-sponsored account into a new individual retirement account. You can structure this account as a traditional IRA or a Roth IRA based on your preferences. A Roth IRA, on the other hand, is a type of individual retirement account. With a Roth IRA,… read more…
Retirement
Is It Wise to Convert 20% of My 401(k) into a Roth IRA Each Year to Avoid Taxes and RMDs?
With retirement planning and taxes, there are often two ways to look at a question: First, can you do something, and then, should you do it? For example, let’s say we have a household planning for retirement. Would it be wise for them to convert their 401(k) into a Roth IRA 20% at a time… read more…
Taxes
I’m Going to Get $3,300 per Month From Social Security. How Can I Reduce My Taxes?
Approximately 40% of households pay taxes on their Social Security benefits, according to the Social Security Administration. If you do owe taxes on your benefits, managing them effectively could save you a lot of money. If you need help planning for Social Security or taxes in retirement, consider working with a financial advisor. However, there… read more…
Retirement
Should I Take a $150,000 Lump Sum or $1,200 Monthly Payments for My Pension?
When companies offer a pension, it’s common to give retirees two options: collect the pension as a lifetime monthly payment or receive it as a lump sum at retirement. Monthly payments over time are the format that most people associate with pensions. However, a lump sum payment can, sometimes, be the better option. Depending on… read more…
Financial Advisor
Thinking of an IRA Rollover? This New Rule Will Impact the Investment Advice You Receive
Financial professionals who give one-time investment advice will soon be legally required to act in their clients’ best interests under the Department of Labor’s new fiduciary rule. Are you looking to hire a fiduciary financial advisor, but don’t know where to start? SmartAsset’s free tool can connect you with up to three advisors who serve… read more…
Retirement
How Getting Married Impacts Your Roth IRA
Getting married does not automatically impact your Roth IRA. Your portfolio and its tax status are unaffected by your marital status. However, in some situations, getting married can make you income-ineligible for Roth contributions. Additionally, getting married can mean making different plans around your Roth IRA. Here’s what you need to know. If you and… read more…
Financial Advisor
How Is Alimony Calculated in California (CA)?
This alimony system was built around the idea that the job market significantly disfavored women, so a divorced wife could rarely support herself. As a result, alimony often required a significant division of future income for either life or until the recipient remarried. Most states have changed this system in whole or in part. Alimony, today,… read more…
Investing
What Are Single Stock ETFs?
A single stock ETF is an Exchange Traded Fund (ETF) designed to magnify the gains or losses of a single, underlying stock. This creates a risk profile that is inverse to a standard fund-based asset. Where ordinarily an ETF mitigates risk and reward through diversification, a single stock ETF significantly increases potential risks and rewards through… read more…
Insurance
How to Lower Retirement Taxes With Life Insurance
There are two main ways to use a permanent life insurance policy for retirement planning. The first is through cash value. You can take money from your policy’s cash account up to the amount of premiums paid tax-free. The second is through a loan. You can borrow against your policy’s death benefit tax-free. This loan will typically… read more…
Retirement
How to Invest in a Socially Responsible Roth IRA
Environmental, Social and Governance, or “ESG,” investing is getting bigger. According to a 2022 analysis from PricewaterhouseCoopers (PWC), “with a projected compound annual growth rate (CARG) of 12.9%, ESG assets are on pace to constitute 21.5% of total global [assets under management] in less than five years.” And, while one-fifth of all global investments seems improbably… read more…
Retirement
How Can I Reduce the Amount of My RMD Payments?
In the year that a required minimum distribution (RMD) is due from a 401(k), IRA or other pre-tax retirement account, you’re required to withdraw a certain amount and pay your taxes due to avoid a 50% penalty. But that doesn’t mean there’s nothing you can do about this, and the associated taxes. With proper planning,… read more…
Retirement
I’m 60 With $1.2 Million in a Roth IRA. How Do I Make Sure This Money Lasts the Rest of My Life?
Planning for a Roth IRA is a little different than with most other retirement assets. This tax-advantaged account generates entirely untaxed income, as long as effectively boosting the value of your withdrawals and your Social Security benefits. That changes your options compared to having a pre-tax 401(k) or other non-Roth account. For example, say that… read more…