Basic Rules to Make Your Portfolio More Tax Efficient
If you’re a do it yourself investor, you probably know a thing or two about stock selection but might not have given much thought to the tax implications of your investment actions. You should never pick investment products with the tax advantage as your primary reason. A quality investment product trumps tax advantages any day of the week but part of making money as an investor is to position it in the best way possible to keep the IRS’ hands off of it.
If all of your investment capital is kept in a single brokerage account there are likely better ways to make your money work harder for you. You may want to consider setting up a Roth IRA but let’s assume that you set up a traditional IRA that allows you to forego paying taxes on that money until you retire. Knowing that, we want to keep our realized gainers in or IRA and our unrealized gainers in our brokerage account. Here’s how to use it to keep more money out of the hands of Uncle Sam and in your account.
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For dividend investors, tax time means that it’s time to figure out whether or not they are dealing with qualified dividends. This is an important distinction because you have the opportunity to pay much lower taxes on qualified dividends. Right now, and until the end of 2012 (unless Congress changes things), qualified dividends are taxed at the current capital gains rate, which is capped at 15%. If you are in a higher
It’s rare that your
The other day, I was walking our beagle Tobey when I spotted something shiny a few feet away. We wandered over and discovered it was a quarter. As I typically do with any free money on the ground, I picked it up and saw it was your typical twenty-five cent piece minted in 1957. As I looked a little closer, it looked whiter than your regular quarter so I made a mental note to check it out when I got home. When I checked online I discovered that the Mint changed the composition of quarters in 1964, removing most of its silver. From 1932 to 1964, quarters were 90% silver and 10% copper. The metal value of the quarter is around $4.80 – I picked up a five dollar bill (it was over $5 when I physically picked it up).
As always, the end of the year represents a time to reflect on the past — and to prepare for the future. While you consider your next move, don’t forget to review your investment strategy. While 
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