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San Francisco Chronicle
12 hours ago
- Business
- San Francisco Chronicle
Do as I say, not as I do: On my failings as an investor
If a knowledgeable observer trained his or her sights on my choices, what are the trouble spots they would identify? Here are some of the biggies. I hold too much employer stock I understand the tax implications of this, so I might as well sell each lot of restricted stock units as soon as it vests because there's no tax benefit to hanging on longer. And it's not like I think I possess some inside knowledge that the shares are likely to outperform the broad market. Instead, the key culprit here is inertia. There's a little bit of tax dread mixed in, too, as selling them would trigger a big tax bill. I've been in the process of divesting from company stock for the past several years, but the allocation is still high. I hold too much cash Even when cash yields are higher, as they are today, inflation still gobbles up most of the interest. Cash has stacked up in our account following bonuses or other windfalls, or during fallow spending periods like 2020. And it just never feels like an especially great time to move the money into long-term investments. Perhaps most important, having cash on hand confers valuable peace of mind. I like knowing that almost anything could happen, and we'd be able to cover it without touching our long-term investments. I think of cash as one of my luxury goods. I don't hold much in bonds My husband and I should have a good slug of retirement assets in fixed-income investments at our life stage. But our portfolio is oddly barbelled, with a healthy dose of cash alongside a long-term portfolio that'smainly invested in equities. In a way, I think the cash and the equities work together from a psychological perspective, with the liquid assets giving us peace of mind to stay the course with stocks. But the lack of bonds isn't really deliberate. Instead, inertia is probably the main reason. We set up our long-term portfolios with heavy equity allocations in our 30s, and we've never really wavered. But this is something that I'd like to address as retirement approaches. I don't have a perfect record with 'asset location' There's a fantastic fund I own—but in our taxable brokerage account. If I could do it again, I'd buy this fund in a tax-sheltered account, because it has made some significant capital gains distributions over the years, which have boosted our household's annual tax bills. Asset-location problems can be difficult to fix. Even though our reinvested capital gains have helped boost our cost basis, we would still owe a big tax bill if we liquidated the position because of the fund's gains. I'm slow to make IRA contributions Ideally, IRA contributions would go in right around the first of the year, to benefit from tax-sheltered compounding for a longer period. And our IRAs sit right alongside our taxable brokerage account, so transferring funds from the brokerage account to the IRA and converting them to Roth is simple. But I've sometimes made those IRA contributions right before the deadline, a full 15 months later than when we were first eligible to make them. I've also been slow to make the conversions to Roth, periodically letting a few years' worth of contributions stack up in our IRAs before converting. The baby bear market of March 2020 provided a good opportunity to convert all the traditional IRA assets to Roth with no tax repercussions. I've been walking the straight and narrow—with timely contributions and conversions —ever since. ___
Winnipeg Free Press
13 hours ago
- Business
- Winnipeg Free Press
Do as I say, not as I do: On my failings as an investor
If a knowledgeable observer trained his or her sights on my choices, what are the trouble spots they would identify? Here are some of the biggies. I hold too much employer stock I understand the tax implications of this, so I might as well sell each lot of restricted stock units as soon as it vests because there's no tax benefit to hanging on longer. And it's not like I think I possess some inside knowledge that the shares are likely to outperform the broad market. Instead, the key culprit here is inertia. There's a little bit of tax dread mixed in, too, as selling them would trigger a big tax bill. I've been in the process of divesting from company stock for the past several years, but the allocation is still high. I hold too much cash Even when cash yields are higher, as they are today, inflation still gobbles up most of the interest. Cash has stacked up in our account following bonuses or other windfalls, or during fallow spending periods like 2020. And it just never feels like an especially great time to move the money into long-term investments. Perhaps most important, having cash on hand confers valuable peace of mind. I like knowing that almost anything could happen, and we'd be able to cover it without touching our long-term investments. I think of cash as one of my luxury goods. I don't hold much in bonds My husband and I should have a good slug of retirement assets in fixed-income investments at our life stage. But our portfolio is oddly barbelled, with a healthy dose of cash alongside a long-term portfolio that'smainly invested in equities. In a way, I think the cash and the equities work together from a psychological perspective, with the liquid assets giving us peace of mind to stay the course with stocks. But the lack of bonds isn't really deliberate. Instead, inertia is probably the main reason. We set up our long-term portfolios with heavy equity allocations in our 30s, and we've never really wavered. But this is something that I'd like to address as retirement approaches. I don't have a perfect record with 'asset location' There's a fantastic fund I own—but in our taxable brokerage account. If I could do it again, I'd buy this fund in a tax-sheltered account, because it has made some significant capital gains distributions over the years, which have boosted our household's annual tax bills. Asset-location problems can be difficult to fix. Even though our reinvested capital gains have helped boost our cost basis, we would still owe a big tax bill if we liquidated the position because of the fund's gains. I'm slow to make IRA contributions Ideally, IRA contributions would go in right around the first of the year, to benefit from tax-sheltered compounding for a longer period. And our IRAs sit right alongside our taxable brokerage account, so transferring funds from the brokerage account to the IRA and converting them to Roth is simple. But I've sometimes made those IRA contributions right before the deadline, a full 15 months later than when we were first eligible to make them. I've also been slow to make the conversions to Roth, periodically letting a few years' worth of contributions stack up in our IRAs before converting. The baby bear market of March 2020 provided a good opportunity to convert all the traditional IRA assets to Roth with no tax repercussions. I've been walking the straight and narrow—with timely contributions and conversions —ever since. ___ This article was provided to The Associated Press by Morningstar. For more personal finance content, go to Christine Benz is director of personal finance for Morningstar.
Yahoo
2 days ago
- Business
- Yahoo
The Best Way To Invest Money To Avoid Taxes, According to John Liang
YouTubers often pitch investing tips, but few break down how to grow your money while keeping taxes to a minimum. Read Next: Learn More: In a video by financial creator John Liang, he outlined a practical, tax-efficient strategy for investing your paycheck in the right order, starting with protection and ending with growth. While not flashy, your first priority needs to be saving money in an emergency fund. While Liang acknowledged that this is a savings account, not an investment account, having this in place can help your long-term investment strategy, as you can use this money in case of emergency rather than pulling money out of other investments. Liang recommended having one month's worth of expenses in a high-yield savings account as soon as possible. He advised building up the emergency fund from there while also funding other accounts. Find Out: Liang called this 'the only investment in which you're going to get a 100% return on your money.' If your employer matches 6% of your salary in a 401(k), contribute at least that much since it's free money and offers tax-deferred growth. While putting in enough money to get the employer match may not be possible in your financial situation, Fidelity advises budgeting and doing what you can to get as much of the employer match as possible, as that will help your finances over the long term. Next, Liang recommended paying down debt with a high interest rate. '[Credit cards] could have interest rates going anywhere from 18% up to 28%,' Liang said. 'That is doing you no favor. In fact, to me, that is like … a financial anchor that's dragging you down.' In fact, according to Equifax, carrying a lot of high-interest debt that's not managed properly can lead to a lot of financial problems. For example, it can harm your credit score, which could make it harder to borrow money in the future if needed. Liang suggested using either the debt avalanche (paying off the debt with the highest interest rate first) or snowball (paying off the debt with the smallest balance first) method. You can also consider 0% APR balance transfer cards, but only if you pay it off aggressively before the promotional period ends. The money you put into an HSA is triple tax advantaged, per Liang. That means contributions aren't taxed, the money in the account grows tax-free and you get tax-free withdrawals for qualified medical expenses. According to the IRS, to qualify for an HSA, an individual must be covered by a high-deductible health plan, have no disqualifying coverage, not be enrolled in Medicare and not be eligible to be claimed as a dependent. Married couples must open separate HSAs, though funds can be used for each other's qualified expenses. Liang's hack is to pay medical costs out of pocket and reimburse yourself years later, letting the money grow all the while. Liang recommended maximizing either a traditional 401(k)/IRA or a Roth IRA/401(k), depending on your tax situation. He explained that traditional options defer taxes, while Roth options offer tax-free growth. 'I actually do lean a little bit more towards a traditional 401(k) just because I can reduce my current year tax liability,' he said. Liang classified debts such as auto loans and federal student loans as medium-interest, and he recommended paying them off next, depending on some factors. For example, if the interest rate is higher than what you'd expect from market returns, paying down that debt may offer a better risk-adjusted payoff than investing, especially if you value guaranteed savings. Brokerage accounts are not tax-efficient, so Liang prioritizes them lower. When you do invest, he suggested sticking to low-cost broad-based index funds, like the Vanguard Total Stock Market Index Fund ETF (VTI), the Vanguard S&P 500 ETF (VOO) or the Vanguard Total International Stock Index Fund ETF (VXUS). Also, Liang recommended avoiding flashy trading apps that encourage excessive activity, such as Robinhood. 'The fastest way to lose money is to buy and sell, buy and sell, buy and sell. Pick the apps that have 'unsexy' UIs because, again, the secret to investing is: put the money in, watch it grow, don't touch it, you're wealthy,' Liang said. Mortgages with rates under 4% aren't as urgent to pay down. Liang suggested investing extra funds instead to earn a higher return. If peace of mind is your goal, paying early is fine. For a mortgage, a smart middle ground is to make biweekly payments to finish years sooner and save thousands in interest. In a recent article, money expert Rachel Cruze also offered that strategy to pay off a mortgage earlier, as well as refinancing, downsizing and making more room in your budget. Ironically, Liang's approach isn't to just grow your money but to keep more of it. With this investment order strategy, you can invest smart while reducing your taxable income, letting your money work for you. More From GOBankingRates 4 Housing Markets That Have Plummeted in Value Over the Past 5 Years This article originally appeared on The Best Way To Invest Money To Avoid Taxes, According to John Liang
Yahoo
2 days ago
- Politics
- Yahoo
Ohio's public media landscape at risk under potential cuts to Corporation for Public Broadcasting
Ideastream Public Media is one of numerous public media stations in Ohio, stations that could face tough choices if funding from the federal government is slashed as part of a Trump administration push to cut funding. (Photo courtesy of Matt Crow, Ideastream Public Media) For those who work in Ohio's public media space, coverage can depend on where they live and work. For those in rural counties, for instance, that means being the only news source in the area. But for some, like The Ohio Newsroom, the mandate is statewide. Reporters use their resources to make sure Ohioans know their neighbors, along with the residents of far-off towns they may not know. 'To me, it's really important that people in Columbus hear about what's going on in Bucyrus, or that people in Cleveland hear what's happening in Findlay,' said Clare Roth, managing editor of The Ohio Newsroom. 'We're all connected, we're all members of this state … and I think that's an essential service that public radio does very well.' The Ohio Newsroom started three years ago with help from a Corporation for Public Broadcasting grant. For Roth, as well as other journalists in the state, the coverage that they do means allowing Ohioans to be able to hear themselves in the news. 'That representation matters and means something, for people to hear folks from their area on the radio and to hear stories about the places that they're from,' Roth said. Public media workers in Ohio are worried about an ongoing effort to claw back federal funds, including more than $1 billion for Corporation for Public Broadcasting. Funding from the CPB goes to local stations who distribute NPR and PBS, and provides grant funding for projects and local programming. US Senate GOP under pressure on Trump demand to defund NPR, PBS, foreign aid The U.S. House already approved what's called a rescissions bill, which Republican leadership and the Trump administration has said is cost-cutting measure, this time for about $9 billion in reductions to foreign aid, along with public media on the homefront. It's now in the hands of the U.S. Senate, facing a July 18 deadline. Many public media outlets in Ohio have enlisted the help of their supporters, listeners, and readers to reach out to their federal representatives and senators and urge push back against the bill. 'I just really believe that public media needs to belong to the public and should be accountable to the public,' said Kevin Martin, president and CEO of Ideastream Public Media. The station actually contains many stations, including the WKSU for NPR and local coverage, PBS station WVIZ. Ideastream is also helps provides livestreams of legislative sessions, committee meetings, press conferences and even the Ohio Supreme Court's oral arguments through The Ohio Channel. Martin has memories of similar attempts to cut federal public media funding, having worked as a distributor of community service grants for the CPB himself. 'I can not remember a Republican president that hasn't had public media zeroed out in their budget,' Martin said. But the bipartisan support for public media has always won the day. With the new administration, however, Martin and other Ohio public media leaders are seeing a different environment. 'Every member of Congress, when they vote, it's a calculation, and I would say nowadays it's about the repercussions of their vote,' Martin said. Local media could see its own repercussions with the budget cuts as they stand, cuts that could not only impact the amount of content the stations can produce, but also their ability to provide things like emergency alerts. 'There's a very well-established infrastructure for emergency alerts that are made possible through public media,' said Luke Dennis, general manager of WYSO in Yellow Springs. 'Public media is, in many places, the only media, so when the internet doesn't work, or you can't afford it at all, it matters to be able to have that service.' WYSO recently established itself as an independent news station apart from Antioch College, and they're working to grow on their own. The station was able to raise about $3.5 million in about nine months 'because the community got excited about WYSO being independent,' according to Dennis. But the CPB cuts could mean a loss of about $300,000 for WYSO. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX 'It will force us to quickly adapt and approve the plan b budget that we have in our back pocket, and we don't want to do that because we're already working lean and mean,' Dennis said. The message from public media leaders to listeners and to lawmakers is unified: the work they do serves their hyper-local community, and national services like PBS make a difference. 'I often ask people if they grew up watching Sesame Street or Mr. Rogers' Neighborhood, because that reminds us that education is a core tenet of public media,' Dennis said. Dennis and Martin said supporters are sending emails and making phone calls by the thousands in support of public media. Martin said Ideastream would 'probably need some consolidation' if the cuts are made, but he and Roth both see the problem at a higher level than station-to-station cuts. 'I worry about the system as a whole,' Roth said. 'I know what a different it can make to tell stories and to really get to the richness of Ohio life, and I hate to think of that being curtailed anywhere.' All of Ohio's U.S. House Democrats voted against the cuts, with the exception of Rep. Joyce Beatty, who was absent from the vote for medical reasons. Beatty told the Capital Journal in a statement that she strongly opposes the legislation and urged her colleagues 'to keep public radio and public broadcast well-funded, free and accessible.' Only one of Ohio's Republican House members, Rep. Mike Turner, voted against the rescissions bill. Turner did not respond to the Capital Journal's request for comment, but Democratic representatives were universal in their support for public media in Ohio, particularly it's ability to give access to rural and low-income areas. 'For families who can't afford access to paid cable or streaming options, easy access to unbiased local media that keeps them well-informed is a vital lifeline that is helping to educate future generations,' according to Rep. Marcy Kaptur. Kaptur also said 'cancelling Elmo won't fix the cost-of-living crisis,' and Rep. Shontel Brown said the bill isn't about saving money, as Republican leaders claim. 'Public broadcasting is a tiny sliver of the federal budget, and for decades, the American people have received a terrific return on this investment,' Brown said in a statement. 'The fact is, if we don't invest in educational programming for children, there is no guarantee that the commercial media will.' Rep. Emilia Sykes said the proposed cuts 'would have a massively negative impact' on her district, and cutting the funding to local stations 'will be a disservice to our communities, as well as those across the country that aren't part of bigger media markets.' Lawmakers who responded to questions about their votes on the bill emphasized the public interest the threat to public media funding has garnered. 'We've gotten calls from so many constituents who say this is a really big deal to them,' said Rep. Greg Landsman, in a statement. 'Cutting over a billion dollars would hit small communities, and we know these are good programs that serve real people.' GOP Rep. Warren Davidson declined to comment for the story, but posted screenshots of NPR headlines on racism and gender inequality, along with a PBS headline on implicit bias and a headline from an unnamed media source mentioning NPR's use of audio from an abortion in a news report to his official X account on June 12. 'This type of 'coverage' shouldn't get a cent of taxpayer dollars,' Davidson's post read. 'Defund NPR and PBS.' The Capital Journal did not receive responses from the other Ohio members who voted to approve the cuts: U.S. Reps. David Taylor, Troy Balderson, Bob Latta, Jim Jordan, David Joyce, Mike Carey and Max Miller. In a video posted to his official X account, Miller spoke proudly of the cuts, though he didn't specifically mention the CPB funds. He said the rescissions bill reductions 'root out waste, fraud and abuse of taxpayer dollars.' 'These are codifying (Department of Government Efficiency) cuts that don't advance American interests,' Miller said. The U.S. Senate has until mid-July to vote on the measure, or the rescissions bill will expire, and the funding will be sent to the entities as previously planned. A spokesperson for Ohio Republican U.S. Sen. Bernie Moreno said the congressman already plans to vote for the cuts. 'It is a blatant waste of American taxpayer dollars that Senator Moreno looks forward to putting an end to immediately,' said spokesperson Reagan McCarthy. Republican U.S. Sen. Jon Husted did not respond to request for comment. SUPPORT: YOU MAKE OUR WORK POSSIBLE
Time of India
3 days ago
- Business
- Time of India
Can a $1,000 Trump Account make your baby a future millionaire?
A new federal program—nicknamed 'Trump accounts'—could set your children on a path to millionaire status. These accounts will provide a $1,000 one-time government contribution to every U.S.-born child between 2025 and 2028. Parents and employers can also make annual contributions—up to $5,000 from families and $2,500 from employers—which can be invested in low-cost mutual funds or ETFs tied to major U.S. stock indexes like the S&P 500. The Power of Early Investing Though details are still emerging as federal agencies draft regulations, investment experts say the Trump accounts could deliver substantial long-term gains. With consistent contributions and favorable market performance, these accounts have the potential to grow exponentially through compound interest. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo In a report, the Fortune wrote that if a family contributes just $20 a week ($1,000/year) and an employer adds the $2,500 maximum annually, the account could grow to over $100,000 by age 21—assuming a modest 7% annual return. Keep investing, and that account could be worth over $2 million by retirement age, the report added citing estimates from Russell Investments CEO Zach Buchwald. Even at the maximum allowed contribution of $5,000 per year, a child's account could be worth $190,000 after 18 years with an 8% annual return—enough to help with college, a down payment on a home, or retirement savings. Live Events A Head Start Other Accounts Don't Offer Unlike Roth IRAs, which require earned income, or 529 plans that are primarily for education expenses, Trump accounts can be opened at birth and are solely focused on wealth-building. That early start provides a major financial advantage. And even if families can't contribute beyond the initial $1,000, the power of compound interest still adds up. At an 8% return, that initial amount alone could grow to nearly $4,000 in 18 years—completely hands-off. FAQs 1. What are Trump Accounts and who qualifies? Trump Accounts are federally backed investment accounts created for every baby born in the U.S. between January 1, 2025, and December 31, 2028. Each child receives a $1,000 one-time government contribution. Parents or legal guardians—who must have a Social Security number and work authorization—can open and manage the account, contributing up to $5,000 annually. 2. How are Trump Account funds invested and used? The funds are invested in a U.S. stock market index. Over time, the investment grows with the market. The money can later be used for key life goals such as college tuition, vocational training, buying a home, or launching a business. 3. When can a child access the funds? Partial withdrawals are allowed starting at age 18 for approved purposes. Full access is granted at age 25 for specific goals like education or entrepreneurship. Unrestricted use of the funds is permitted once the account holder turns 30. 4. Who manages the account until the child becomes an adult? Until the child turns 18, the account is managed by their parent or legal guardian, who makes all investment and contribution decisions. 5. Why are some financial experts skeptical of Trump Accounts? Critics point out that unlike 529 plans, Trump Accounts offer no tax deductions and earnings are taxed as ordinary income. Financial advisers like Amy Spalding continue to favor 529 plans for their tax advantages and broader investment options.
