Arrange Your Financial Matters to Reduce Your Taxes

 Can you arrange your finances to reduce your taxes? Are you allowed to do so?

The answers are yes and yes again!

Here is one way to do that:

The information provided here is my take on finding the best investment options for me and for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. 

Which ETF or Mutual Fund?

Fidelity or Vanguard?

See what Rose says:

Fidelity has a number of index mutual funds with zero expenses. How do they do that? With costs coming down, Fidelity absorbs the cost, hoping to sell you other services. Also by following an in-house index, they do not have to pay license fees to S&P or any other indexing service. Returns are also better because the stocks they own are 'lent' to other brokerages and earn additional passive income.

Pros:                    

• No minimums on the first purchase
• You can purchase fractions of the fund, you do not have to buy a full share
• You can automate your investment

Cons: 

• The price at which you purchase the fund is not set until the close of market

With the zero expense funds, the difference between Mutual Funds and ETFs has just narrowed!                

US Total Stock Market Funds/ETFs:

      FZROX - Fidelity Total Stock Market Fund - Expense Ratio 0.0%

    VTI - US Total Stock Market - Expense Ratio 0.03%

   SP500 Funds/ETFs:

      FNILX -  Fidelity Zero Large Cap Index Fund - Expense Ratio 0.0%

     

      FXIAX - Fidelity 500 Index Fund - Expense Ratio 0.04%

VOO -  Vanguard S&P500 Index Fund - Expense Ratio 0.03%

      

   International Stock Market Funds/ETFs:

      FZILX - Fidelity Zero International Index Fund - Expense Ratio 0.0%

      VT - International Stock Market - Expense Ratio 0.05%

Growth Funds/ETFs:

      QQQ - Invesco QQQ Trust tracks the Nasdaq  - Expense ratio 0.2%

      ARKK - Actively Managed -Technology ETF - Expense ratio 0.75%

      TAN - Actively Managed - Invesco Solar ETF - Expense ratio 0.71%

      

       PBW - Actively Managed - Invesco WilderHill Clean Energy ETF - Expense ratio 0.70%

       ARKG - Actively Managed - Genomic Revolution ETF - Expense ratio 0.75%

Bond Funds/ETFs:

VBTLX - Vanguard Total Bond Market Index Fund Admiral Shares - Expense Ratio 0.05%

Dividend Funds:   

      NOBL - S&P500 Dividend Aristocrats 2.28% - Expense Ratio 0.35%

      SCHD - Schwab's US Dividend ETF - Dividend Yield 3.44% - Expense Ratio 0.06%

      VIG    - Dividend Yield - Dividend Yield 1.81% with Growth - Expense Ratio 0.06%

      VYM  - High Dividend Yield 3.5% - Expense Ratio 0.06%

      SPHD - Dividend Yield 5.5% - Expense Ratio 0.3%

Check out the ETF screener at the Fidelity ETF Research Center. Here is a sample of what you can expect to see:

Data from public sources, prices and data may have changed. Please reconfirm before committing any funds or making any investment plans. Copyrights and attributions as mentioned.

The information provided here is my take on finding the best investment options for me and for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. 

Are All Target Date Funds The Same?

 That was the question I set out to answer.

And here is one answer I found at mymoneyblog:

Mediocre Target Date Funds

It could cost you $250,000 or about 12.8% in just 10 years to just hang (HODL = 😲) on to a Target Date Fund. Surprised? I wasn't! Convenience comes at a price!

But one size does not fit all. So there may be circumstances when a target date fund might be right, especially if you are unable to rebalance your index funds from time to time. And all target date funds are not the same either. So here is some more information from moneyunder30:

Index Funds v/s Target Date Funds

The Vanguard Target Retirement Funds with an average cost of 0.17% and the Fidelity Freedom Index Funds which are different from the Fidelity Freedom Funds win our seal of approval.

The information provided here is my take on finding the best investment options for me and for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. 

Investments for a Roth IRA - Asset Allocation

Your Roth IRA is just an account. Once you make a deposit into your Roth IRA, you need to invest in the stocks, ETFs or Mutual Funds you choose. Until then your money earns you nothing! 

Here are the three steps to make your Roth work for you:

1. Decide an asset allocation

Target Date Funds have somewhat simplistic asset allocations, but the allocations change to reduce risk the closer you are to retirement, without any intervention on your part. If your retirement is say 30 years away in 2050, a target date fund might have an asset allocation something like this: 

60% Domestic Equity

30% International Equity

7% Bonds

3% Money Market Fund or Cash Fund

With just a few years to retirement, say in 5 years, your allocation could change to:

30% Domestic Equity

15% International Equity

50% Bonds

5% Money Market Funds or Cash Funds

The advantage is that your allocation is automatically maintained and closer to retirement, the allocation gets tilted away from risky assets like equity and towards less risky assets like Bonds to minimize a huge drawdown just when you need the funds.

2. Decide which funds

3. Rebalance at least annually or whenever allocation is off by a set percentage.

4. Consider an allocation to crypto-currencies.

The information provided here is my take on finding the best investment options for me and for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager. 

Should I Invest In A Roth IRA?

 A Roth IRA offers income earners in the US another way to invest (apart from the Traditional 401K offered by your employer).

Should you take advantage of it? When does it make sense to invest in a Roth?

If you have any investments outside of your 401K (and I believe you should!), compounding and career growth will ultimately push you into a higher tax bracket. If that happens, a Roth makes a lot of sense. But if you have only 5 or 10 years to retirement, a Roth IRA might not be of much benefit.

More on the topic from Schwab.com

And here is a Roth IRA v/s 401K calculator from Bankrate.com

The information provided here is my take on finding the best investment options for me and for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.