The clock is ticking towards Tax Day, April 18. Here are some timely tips for tax form procrastinators.
For further research:
- Terrysavage.com, Tax Time
- Nextavenue.org, 11 Last-Minute Tax Tips for 2022 Returns
When you’re reviewing quarterly and year-end performance in your 401(k) and brokerage account statements, it’s important to consider how much you may be paying in annual fees (expense ratios) to mutual funds and commissions to brokers. These combined costs could be as high as 2% per year. While this may seem small, over several decades of investing, these costs could potentially reduce the value of your retirement nest egg by tens of thousands of dollars. And if you’re retired and now invest mostly in low-yielding bond funds, these costs may actually wipe out the small amount of income these funds generate each year.
It’s up to you to research how much you’re paying in investment costs, and whether less expensive options are available. For example, most mutual funds come in various share classes, each of which have different expense ratios. Shares of funds you purchase on your own may have significantly lower expense ratios than different share classes of the same funds you purchase through a broker, which may add on as much as 1% in additional “marketing” fees to pay brokerage commissions. Not to mention added “back-end” sales charges if you sell shares before a certain time period has elapsed.
If you invest on your own and you’re not a strong believer in the ability of mutual fund managers to make the best investing decisions, consider investing in index funds and ETFs that offer broadly diversified exposure to different segments of the market at a fraction of the cost of actively managed funds.
If you’re working with a broker, ask them to disclose the total annual costs of the funds they’ve sold you. If these costs seem too high, ask them to recommend cheaper alternatives that have similar characteristics and track records—but make sure you won’t have to pay back-end sales charges if you make the switch. If your broker doesn’t take your cost concerns seriously, consider firing them and hiring a fee-only fiduciary investment adviser to manage your portfolio. These professionals charge you an annual fee (which they will fully disclose) and never accept commissions from fund companies. In exchange, they’ll be able to tell you exactly how much you’re currently paying in mutual fund fees and recommend lower-cost options that align with your investment objectives and risk tolerance.
For further research:
The clock is ticking towards Tax Day, April 18. Here are some timely tips for tax form procrastinators.
For further research:
Mention the word “annuity” and most investors recoil. There seem to be so many hidden secrets and costs. And high pressure sales tactics along with "free dinners."
In today’s podcast we unravel those mysteries – with the one man who has consistently worked to educate the public to the ins and outs of annuities – as well as some of the better uses of these insurance company contracts. Stan Haithcock’s website – www.StantheAnnuityMan.com -- is a great resource for free basic information and good advice on annuities. And Stan is one of the most entertaining financial speakers you’ll ever meet.
So, sit back and enjoy our podcast. We devote special attention to Multi-Year Guaranteed Annuities (MYGAs), now yielding over 5.5%. They’re the insurance industry’s version of a bank CD, without the FDIC backing. And they are a great way to improve yields either inside or outside your IRA.
To read more about MYGAs, here’s a link to Terry’s column on the subject: https://www.terrysavage.com/an-annuity-that-works-for-you-myga
And if you’d like to listen to more of Stan’s terrific approach to financial markets, both Terry and Pam have recently joined him on HIS podcast. You’ll find the links to these conversations here:
Terry Savage: The Savage Financial Truth in 2023
https://www.stantheannuityman.com/fwa-terry-savage-january-2023
Pam Krueger: Your Wealthramp to Fiduciary Advice
https://www.stantheannuityman.com/fwa-pam-krueger-february-2023
