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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.
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 […]
Our Iceland money-saving tips will help you stop overspending on Iceland tours, activities, and airport transfers! Planning a trip to Iceland is so (so) exciting, but let’s be honest— expenses can add up quickly! Luckily, we’ve found some fantastic ways to save money on our Iceland vacation while booking bus transfers, tours, and activities. By […] The post Save Big on Iceland Tours With These Iceland Money-Saving Tips and Hacks For 2025 appeared first on […]
There’s nothing quite like a hearty, homemade meal that fills your belly and warms your soul, without emptying your wallet! If you’re looking for an easy, budget-friendly dinner that’s full of flavor and made with simple ingredients, then this easy hamburger steak with gravy recipe is just what you need. It’s a tried-and-true classic that brings back memories of old-fashioned home cooking, proving that delicious meals don’t have to be expensive or complicated. This is […]
Hey there, Dream Catcher! Let’s talk about something many of us have been avoiding – our retirement savings. If you’re feeling behind on your catch up retirement savings journey, I see you. I hear you. And most importantly – I’ve got you! Whether life threw you curveballs or retirement planning simply wasn’t on your radar until now, it’s NEVER too late to make powerful moves toward financial freedom. Think about it: every single day offers […]
Let’s talk about something many of us have been avoiding – our retirement savings. If you’re feeling behind on your catch up retirement savings journey, I see you. I hear you. And most importantly – I’ve got you! Whether life threw you curveballs or retirement planning simply wasn’t on your radar until now, it’s NEVER too late to make powerful moves toward financial freedom. Think about it: every single day offers a fresh opportunity to […]
Wondering how to save money at Disney World and make your dream trip affordable? Walt Disney World is truly the place where dreams come alive! For many families, a trip to this magical destination represents the ultimate vacation, filled with laughter, adventure, and unforgettable memories. We all know that making those dreams a reality can […] The post How To Save at Disney World: 20 Insider Tips For Saving Money On Your Walt Disney World […]
Tax season is here, and with it comes the age-old question: Should I file my taxes early or wait until the deadline? It’s a decision that can feel overwhelming, especially when you’re juggling work, family, and life’s other demands. But here’s the good news: you don’t have to figure it out alone. Filing early can come with […] The post Should You File Your Taxes Early? Here’s What You Need to Know appeared first on CuraDebt.
Tell me if this sounds familiar—you spot a ‘limited-time sale,’ rush to grab the deal, and walk away feeling like you just won at shopping. But then… a few weeks later, you realize that ‘amazing bargain’ wasn’t so amazing after all. Maybe it fell apart, maybe you didn’t actually need it, or maybe—just maybe—the sale wasn’t even real. If that’s ever happened to you, don’t worry—you’re not alone. Today, we’re breaking down the myth of […]