Articles by Glenn Wessel, CFA®, CPA, CFP®
'Tis the Season for the Mutual Fund Tax Trap
Mutual fund ownership has become nearly ubiquitous, and for good reason. Funds offer easy diversification, professional management, and they are accessible to even the smallest investors – all while eliminating much of the time and effort that would otherwise be required to construct and monitor a portfolio of individual securities.
Ginnie Maes - 100% Guaranteed but Not Risk-Free
As I walked past a sidewalk café recently, I unwittingly overheard a man tell an older lady, "Ginnie Maes yield more than CDs, but they’re just as safe because they’re also 100% guaranteed by the government. " Although my neck surely swiveled as I walked past, etiquette precluded me from pulling up a chair.
Mutual Fund Distributions...Don't Overpay Your Taxes
As investment vehicles go, the ubiquitous mutual fund is a pretty convenient animal.
Deductibility of Home Mortgage Interest
Arthur Godfrey once proclaimed "I am proud to be paying taxes in the U. S. The only thing is – I could be just as proud for half the money. " Yeah, man. Whereas itemizing taxpayers were once able to deduct 100% of their home mortgage interest, repeated efforts to simplify our tax code have made things…complicated. Bottom line? Not all home mortgage interest is deductible.
Tapping Into IRAs...Smartly
The tax advantages associated with IRAs are well established. Walk into the lobby of any bank, insurance agency, or wirehouse and you’re likely to find a glossy brochure touting the synergistic benefits of compounding one’s earnings in a tax-advantaged environment.
Beware the Equity Indexed Annuity
Economists are fond of saying that there is no such thing as a free lunch. Investors often interpret this enduring truth to mean that the quest for higher investment returns is necessarily accompanied by increased risk. Fair is fair, after all.
Brokerage Industry Forced to Play Fair
The title on that linen, tri-color business card might read "financial advisor," or "financial consultant," or maybe even "senior vice-president of investments.
Don't Overlook NC's Own College Savings Plan
If you’re among the many who face the prospect of putting one or more children through college, you may already be aware of the advantages typically associated with so-called section 529 College Savings Plans.
Mortgage Lenders Teasing You
Once upon a simpler time, mortgage loans were based on 20% down payments, 15 or 30 year amortization schedules, and interest rates that were fixed.
Risk, Return and Portfolio Efficiency
Investors generally seek to maximize their returns for a given amount of risk and minimize their risk for a given return.
Be Charitable - but be Tax-Smart
Playwright Oscar Wilde once observed, "Charity…creates a multitude of sins. " Although the sins to which Wilde was referring probably had more to do with lethargy and less to do with tax planning, some might consider it a sin for the benevolent-minded among us to line the IRS’ coffers more than necessary.
Investment Income - Don't Be ShortSighted
When choosing among investment alternatives where income is a primary consideration, conventional choices often include money market instruments, CDs, bonds, bond funds, unit investment trusts, and certain types of annuities. Notably absent from that list is the lowly dividend-paying, common stock. Because common stocks can be volatile, they are often excluded as a viable income solution.
Beware the Free-Lunch Seminar
It’s a demographic fact that retirees have a lot of money sloshing around in their collective pocket. In an effort to obtain a piece of this ever-tempting pie, financial firms and other promoters have increasingly turned to "free-lunch" seminars. Of course, they don’t label them as such.
The Art of Financial Engineering
As with many other aspects of modern society, the realm of finance continues to grow ever more complex. Due to an explosion of financial nuance, decisions that were once within the grasp of the average person have become much less so. Years ago, obtaining a car required its purchase. Later, cars could be leased.
Royalty Income Trusts and the Temptation of High Yields
Given a choice between like amounts of income and capital appreciation, investors will generally opt for the income producing asset on the assumption that it represents less of a crapshoot than an asset whose returns are generated via capital appreciation. As they say, a bird in the hand is worth two in the bush.
Expecting 1099s...Don't Rush to File
About a month after the close of the year, investors who have received dividend payments are supposed to receive so-called information returns from the financial institutions that have handled those payments. These information returns, which sport the moniker "1099-DIV," are increasingly needing to be revised, or in tax parlance, "corrected.
Cash Value Life Insurance - A Different Kind of Dividend
I have previously explored a number of the dubious marketing claims that swirl around cash value life insurance (CVLI) – a broad category of life insurance that tries to double as an investment. Here, I’ll explore the allure of the "participating" CVLI policy.
ETFs...Better than Mutual Funds?
If you’ve heard of exchange-traded funds (ETFs), but you’re not sure what all the fuss is about, you owe it to yourself to give them a look. As with traditional mutual funds, ETFs hold pools of securities in their portfolios and issue shares against those portfolios to outside investors.
Closed-Ended Funds...Buy Assets at a Discount
At its core, investing is a lot like grocery shopping. Both are exercises in obtaining maximum utility while operating within certain constraints. Whereas grocery shoppers may try to achieve a healthful diet for a minimal outlay of cash, investors are typically interested in either maximizing profit for a given level of risk, or minimizing risk for a given level of profit.
Before Investing...Read Pile
I’d estimate that our office receives an average of two phone solicitation attempts per day. Although our policy is to intercept telemarketing calls as soon as possible, I do find myself on the phone with various telemarketers from time to time.
