Sign up with your email address to be the first to know about new products, VIP offers, blog features & more.

You are viewing Uncategorized

How ETFs Can Reduce Your Tax Bill

At the end of the year, many mutual fund companies distribute capital gains to shareholders. This causes a taxable event right at the end of the year and in some cases can be an unwelcome and costly surprise when it comes to tax time. Note: if you only have an IRA or Roth, you’re off the hook – this taxable event only applies to investors with individual, joint or trust accounts.

This year, we have seen some funds projecting capital gains that are as high as 11% of the value of the fund. If you had a $100,000 position in a fund that issued a capital gain of 10%, that would be a $10,000 capital gain. If taxed at 15%, you can expect to pay an extra $1500 in taxes.

In a lot of cases – this is unavoidable. Investors could face a much bigger tax bill if they sold out of the fund as they may have large capital gains as a result of holding the fund for many years. Either way, the investor is likely have to pay an unexpected tax.

That begs the question – how can investors build portfolios to minimize the pain of capital gains distributed by the fund company. One answer involves the use of passively managed Exchange Traded Funds (ETFs) which tend to be much more tax efficient than mutual funds. posted a good article that helps to explain why ETFs can help avoid the unpredictability of capital gain distributions.

View the article on

Too late for this year, but contact us if you’re interested in how ETFs could help reduce your future tax bills.

Your Pot Of Cash Has A Hole In It.

You, like many Americans, may have a sizeable pot of cash just sitting in a bank account earning next to nothing.

The goal in keeping cash in a bank account is safety.

But what if I were to tell you that you that there was a hole in your pot and you are losing 2-3% each year and not even realizing it? You might think twice about keeping high levels of cash in the account.

In a sense, that’s what is happening. Every year, the cost of goods and services increases by 2-3% but the cash stays the same. This cash in your pot has ability to buy a little bit less than it did the year before and the year before that. This is the conception of inflation.

$50,000 today will buy more than $50,000 5-10 years from now.

One option to get around this harsh reality is to invest excess cash in a balanced diversified portfolio.

Why Waiting For The Right Time To Invest May Cost You In The End

At least once a week, a client will give me a reason why they don’t want to invest in the US stock market. They mention the headlines (which are designed to scare investors), and talk about the crisis-du-jour, or reference the looming economic dark clouds growing in the distance.

And so they sit in cash, with its perceived safety, waiting for the dust to settle, the clouds to clear, and the right time to invest.

But will it ever come… will it ever be so clear to the investor as to when they should invest?
Perhaps not.

What Cheap Oil Means For The Shale Boom

Shale oil production is more expensive than traditional oil production – It costs more to get shale oil out of the ground. So when the price for oil drops, like it has, it hurts shale oil production a whole lot more than with other production methods. Bloomberg estimates that the price of oil needs to be over $80 a barrel for US drillers to make any profit. Oil is hovering right around that figure now.

For more reading:

Bloomberg’s Quick Take

Oil at $80 a Barrel Muffles Forecast for US Shale Boom