Amid the election year hoopla, pundits are already theorizing about the impact the candidates will have on the stock market and broader economy. As tempting as it can be to get caught up in this rhetoric, we urge you to tune out the noise and instead stick to your long-term strategy. Making decisions based on political leanings or emotional fervor can seriously threaten your financial well-being.
The U.S. tax code is overly complex, not just for the income you earn working in your career, but also for the income you earn from your investments.
The good news is that by understanding the different tax treatment that applies to different investments—and account types—we can plan a tax-wise asset location strategy. And, successful asset location can significantly minimize the amount of taxes you pay on your investments as a whole. This can lead to a meaningful increase in your after-tax return—the money you get to keep, which is all that really matters.
The typical financial advisor loves to focus on your investments—after all, most earn sales commissions for selling you stocks, bonds, annuities, or mutual funds.
But the team at Align Wealth Management seeks to take care of every facet of our clients' financial lives, from cash flow to taxes, from insurance to estate planning and charitable giving. Simply put, we believe in treating you as a human being - not as an investment account. And we're armed with the best tools and technology to make it happen.
If you're an investor, you've surely heard the saying "It's not what you earn, it's what you keep." Minimizing taxes is important when you're growing your savings for retirement—but it's at least as important after you're retired.
That's why retirees with different types of taxable and tax-deferred accounts should carefully plan the sequence in which they will withdraw money from those accounts. At stake is not just tax savings but also the potential for greater investment growth.
The various account types include traditional IRAs and workplace plans such as 401(k)'s, which are funded with pre-tax dollars. In these vehicles, taxes are deferred until withdrawal so that those assets can compound and grow faster. Roth 401(k)'s and Roth IRAs are funded with after-tax dollars, and their assets grow and are withdrawn tax-free. Finally, many investors have taxable brokerage accounts, which are funded with after-tax dollars and accrue taxes on gains, interest, and dividends.
As we've previously written, there's a big difference between stockbrokers and true financial advisors. Brokers are salespeople: Because they're paid to sell you investments or insurance, they operate under a continual conflict of interest.
True financial advisors, on the other hand, only sell advice, not products. Unlike brokers, they are what's known as fiduciaries, meaning they must place clients' interests ahead of their own. Align Wealth Management is a fiduciary firm.
There's been a major development on this front. Early this month, the Department of Labor ruled that all advisors giving guidance to clients with 401(k)'s or IRAs must adhere to a more stringent "fiduciary" standard. This new rule, which goes fully into effect in 2018, is aimed squarely at brokers. For the first time, brokers will have to act more like true advisors.