Category Archives: Taxes

The Difference Between Marginal and Effective Tax Rates

Guest post by Contributing Editor, Matthew Amster-Burton, Mint.com.

Think you’re unlucky? I know a guy who’ll pay 99% of his income in taxes if the Bush-era tax cuts expire at the end of December. Continue reading

Sector Watch: Municipal Bonds

Municipal bonds are issued by states and municipalities and typically have tax advantages relative to other fixed income assets.  In general, income from muni bonds is tax exempt at the federal level and at the state level for investors living in the issuing state.  Municipal bonds have historically been favored by investors in high tax brackets who, of course, derive more benefit from the tax exemptions by virtue of being in the highest tax brackets. Continue reading

The Golden Rule of Investing

Guest post by Contributing Editor, Lowell Herr, ITA Wealth Management. Lowell is a subscriber to the Portfolioist and his investment philosophy is similar to ours.  Enjoy.

The Golden Rule of Investing is simply, “Save as much as you can as early as you can.” The operative word is early. William J. Bernstein lays it out in stark language in his book, “The Investor’s Manifesto“ when he writes, “Each dollar you do not save at 25 will mean two inflation-adjusted dollars that you will need to save if you start at age 35, four if you begin at 45, and eight if you start at 55. In practice, if you lack substantial savings at 45, you are in serious trouble. Since a 25-year-old should be saving at least 10 percent of his or her salary, this means that a 45-year-old will need to save nearly half of his or her salary. Most 45-year-olds will find this nearly impossible, if for no other reason than the necessity of paying living expenses, payroll taxes, and income taxes.” Continue reading

Tax Loss Harvesting: Five Tips to Keep More of What’s Yours

Here at the Portfolioist, we frequently turn to Steve Thorpe, founder of Pragmatic Portfolios, LLC to share his insights on the topic of Tax Loss Harvesting. Here are 5 of his Tax Loss Harvesting Tips to help keep more of your money when tax time rolls around.

It’s impossible to reliably predict future changes within the investment markets, however there are numerous ways for investors to favorably influence their own results. Important areas to focus on include developing an investment plan, saving regularly, diversifying widely, adhering to an appropriate asset allocation, and paying attention to all forms of costs – including taxes. For many investors, tax loss harvesting can improve their after-tax bottom line, sometimes to the tune of thousands of dollars per year. Continue reading

Tax Loss Harvesting: Share Your Pain with Uncle Sam

Summer is winding down. And believe it or not, 2012 is more than half way over, which means it’s a good time for investors to start thinking about the year-end tax implications of their portfolios.

We invited Steve Thorpe, Founder of Pragmatic Portfolios, LLC to share some insights on Tax Loss Harvesting. Enjoy.

Tax Loss Harvesting: Why Should You Care?

Would you invest a few hours to reduce this year’s taxes by $1,000 or more?

For investors with taxable investment accounts, this is often possible by taking advantage of tax loss harvesting (TLH). This perfectly legal strategy makes lemonade from lemons, allowing Uncle Sam to share part of the pain of the losses inevitably experienced by investors at some points during their investing career.

Between now and Continue reading

New Tax Deductions and Limits for 2012

Guest Blog by Craig Guillot, Quicken.com.

With the start of 2012, there are a number of new tax laws and adjustments. From higher tax bracket thresholds and standard deductions, you’ll have some positive and negative changes to your taxes this year.

Higher federal income tax-bracket thresholds

A number of tax changes in 2012 have been due to standard inflation-related adjustments. Continue reading

The Five Biggest Financial Issues for Pre-Retirees

The last several years have been hard for many people.  There are unique challenges for different segments of the population.  In this article, I am going to focus on the issues specific to people who are approaching retirement and will soon be living on investment income and other forms of non-wage income such as pensions, social security, etc.

The top five financial issues, as I see them, are: Continue reading

Tax Loss Harvesting Season is Here

Believe it or not, year-end is right around the corner which means that it’s time for investors to start thinking about their tax implications. In order to help you make sense of it all, we wanted to share this article originally published last year by guest blogger Steve Thorpe. Enjoy–

Would you invest a few short hours to reduce this year’s taxes by $1,000 or more? For investors with taxable investment accounts, this is often possible by taking advantage of tax loss harvesting (TLH). This perfectly legal strategy makes lemonade from lemons, allowing Uncle Sam to share part of the pain of the losses inevitably experienced by investors at some points during their investing career

Between now and the end of the year is a good time to review your portfolio to see if any of your holdings are in the red. If so, you might be able to use those losses to help lower your 2010 tax bill.

In this article I’ll review:

  1. How to harvest a tax loss and under what circumstances you might want to.
  2. Why you need to keep track of what your investments cost in the first place.
  3. How to properly rebalance your portfolio after a sale, without triggering undesirable tax consequences.
  4. The way investments look from a tax perspective: short-term losses can be more valuable than long-term losses. But hold onto gains at least a year and a day.

Continue reading

From the Portfolioist Book Shelf: Live It Up Without Outliving Your Money!

Guest Blog by Steve Thorpe

Are you a do-it-yourself type seeking strategies to manage your retirement investments?

Thousands of books, magazines, web sites, and broadcast media sources promise help, however many publications are in fact cleverly designed to market expensive Wall Street products that pay for others’ retirements – not yours!

In contrast, Paul Merriman’s Live It Up Without Outliving Your Money! Getting The Most From Your Investments In Retirement is a great resource for investors researching techniques to effectively manage their retirement portfolios. Here I share a few chapter highlights that I hope will whet your appetite for more. Trust me, you will find many valuable tips in this book. Continue reading

The Top 5 Things Every Investor Should Know

Worried about the wild swings in the stock market? Not sure what’s next for the economy?

You can successfully invest in these uncertain times—and you won’t have to chase the next new IPO or buy into the latest advice on CNBC.

Here are the top five things every investor should know. Continue reading