There are some things that should be left in the past, but these 18 old-fashioned frugal living tips are not among them. These old-fashioned frugality … Read More 9 Old-Fashioned Frugal Living Tips You Need To Bring Back

Before the article, here’s what’s happening this week on our podcast, Personal Finance for Long-Term Investors: The world of financial planning comprises many strategies and tactics, some big and some small. Dollar-cost averaging, sequence of returns, tax-loss harvesting, and the list goes on. Depending on who you ask, the process known as “asset location” could be one of the more impactful arrows in your financial planning quiver…or it could be a total waste of time. So which is it? Does asset location matter in the long run? And if so, can we quantify it? What is Asset Location? Let’s start two fundamentals of investing that set the table for today’s discussion: Many investments provide cash back to the investor as an annual return on investment. Stocks can yield a dividend payment. Bonds pay income. Mutual funds and ETFs can trigger yearly capital gains taxes for their investors, even if the investor didn’t actually sell off their shares! These dividends, bond income, realized gains, etc., are all subject to taxes unless the assets are held in a qualified tax-advantaged account, such as a 401(k) or IRA. Only a taxable investing account suffers the annual taxation described above. These two facts raise an interesting question: Can we intentionally place “high-tax” investments in our qualified, tax-advantaged accounts and then put the “lower-tax” investments in our taxable accounts? Won’t this lower our annual tax bill, leaving more assets in our portfolio to compound, and indeed create a positive long-term advantage?! In other words – can we maximize our total after-tax returns this way? Can we minimize “tax drag?” This is asset location. Investing Dog, Tax Tail A discerning investor might now ask, “Why not simply avoid investments that shed off too much taxable income? Wouldn’t that be an easier path?” The short response is, “Don’t let the tax tail wag the investing dog.” Tax considerations should not dictate investment decisions at the expense of sound strategy. While minimizing taxes is important, it should be a secondary goal behind risk tolerance, time horizon, diversification, and overall portfolio objectives. And I can say from experience: asset location isn’t the only place where investors let the tax tail wag their investing dog. People avoid necessary portfolio rebalancing. They hold onto bad investments to defer capital gains. They stay overweight in their own company stock, RSUs, stock options, etc. People allow the fear of taxes to cause them to do dumb stuff. Smart investors certainly optimize for taxes. It’s important! But they don’t let tax concerns override sound investing principles. Asset Location “Theory” The basics of asset location are straightforward. Bonds tend to be tax-inefficient. Bond returns come from annual interest, which cannot be deferred into future years and is taxed at ordinary income tax rates. If a bond has a 4% annual return, taxes could easily reduce that to a 3% (or lower)

Do you have any NS&I Index-linked Savings Certificates? Are they approaching maturity? Are you wondering what to do with them? The product’s attractions have deteriorated in recent years, so renewing your certificates may not be the no-brainer it once was. On the other hand, inflation is back and proving stickier than a toddler wielding jammy doughnuts. And if that’s a concern for you then there are still good reasons to keep even today’s atrophied Index-Linked […]

In case you aren’t aware that a huge profit source for every broker is your idle cash, Bloomberg reports that Fidelity and Schwab are blocking all new purchase trades of new money market ETFs (gift article) from Blackrock and Texas Capital. Here’s what Fidelity and Schwab say about it: A Schwab spokesperson said its decision is consistent with the firm’s “long-standing approach” of only making available Schwab affiliate money-market mutual funds, while a Fidelity spokesperson […]

This one’s for everyone looking for online tax software discount to help cut their tax filing costs. As you’re probably aware, the federal tax deadline is fast approaching (Tuesday, April 15, 2025). Unless you are filing an IRS tax extension or your income level does meet the threshold for filing taxes, you’ll need to submit your tax return by that date. Thankfully, there are still a number of limited-time options for discounts on tax filing software at the moment… All of the affiliate tax software partner discounts I highlighted in my best tax prep software comparison are active at the The post All of the Tax Software Discounts & Promo Codes Still Active for 2025 appeared first on 20somethingfinance.com.

Have you considered using a bullet journal budget tracker? I have to admit, up until a few weeks ago, I tracked my budget on a scrap of paper stuck to my office wall and a spreadsheet. I also use Pocketsmith for tracking after the fact, but I’ve been on a mission to get more organised … Read more

  If you wear glasses, you know that they can be expensive! Back when we were paying off six figures of student loan debt, I was especially diligent at figuring out how to reduce every one of our expenses. While some of our spending habits have changed as our finances have changed, our spending on glasses has not. My secret to saving money on glasses is the same as ten years ago and has not […]

Note: The winners of last week’s FIRE album giveaway will be announced at the end of this post. I’ve been asked on numerous occasions how we deal with taxes in retirement. Spoiler alert, if your portfolio is structured properly, you should be able to get away with paying $0 (or pretty damn near close to $0) in taxes after you retire. But how much of that is aspirational, and how does it play out in […]