Quote:
Originally Posted by Chad-1stGen
Absolutely!! If all your money is in one type of investment it doesn't matter. Also people may not have room in tax advantages accout like an IRA. That said, always keep as much of your fixed income (aka bonds) and dividend stocks in tax advantages accounts. If you do have growth stocks keep those in your taxable brokerage accounts.
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Again -- on the educational side of this only -- I disagree -- but with the following differences -- again because when we make big statements - we need (in this thread) to make sure people understand the THOUGHT behind such.
There would be absolutely ZERO advantage to hold
tax free muni bonds in a tax advantaged account (which means tax deferred really) because there is no tax due. That holding would be best held in an ordinary account because it's not going to affect your taxes.
IF -- BIG IF -- these BONDS are CORPORATE BONDS -- then that is different because that INTEREST paid is taxable at ordinary income tax rates. It would - of course - be TAX DEFERRED if held in an IRA/401 type account.
A "GROWTH STOCK" (pays no dividend for this discussions sake) -- or let's really just say ANY STOCK that has a GAIN - has NO TAXABLE EVENT if it's not sold - i.e., the gain is NOT REALIZED... that stock can grow to the moon and have no tax consequence
until you sell. SO the major difference in where you'd hold this type of stock is not really important under current (I should underline that! CURRENT) tax law. LONG TERM GAINS are currently taxed at 15% regardless. Only SHORT TERM GAINS (held less than one year and a day) are taxed at ordinary income tax rates.... So if your mother is 80 and has virtually no income - and you sell 10 grand of her long term holdings - big deal - she pays 15%! And it would be less of a big deal if you sold something short term because she may have NO TAX DUE based on her income. But these are CPA discussions not really "investing" except that they can affect your return so are worth talking about.
But now we're having a tax discussion -- rather than an INVESTING 102 discussion....
Here's something I've had to tell my CPA - and trust me when I tell you that my tax bill is beyond ridiculous.... so we have LOTS of discussions of where, when, why and how come!
"If I make a buck and have to pay the gubment 40 cents of it -- I still made 60 cents.... right?"
Isn't it better that I make 60 cents than nothing at all?
Frankly -- I'm happy as hell my tax bill is huge - 'cause that means I made a killing! And "they" only got a small percentage of it. The rest is all mine!
EEEEEEEEEEEEEEEEHHHHHHHHHHHHAAAAAAAAAA