Jonathan, thanks for all of your helpful financial planning advice from years at Wall Street Journal through humbledollar.com! You have helped me tremendously. I recommend your “money guide” subtopics to everybody if they want to learn in one or two pages about a particular financial planning topic. Thanks for you and your site being such a great read with helpful information for all of your humbledollar.com fans!
all the best to you and your family!
Dividends are an illusion. They are not income. The reason they are in illusion is when you receive one dollar dividends the value of the stock goes down exactly one dollar. Dividends are a psychological license to spend. They are not income the way interest on bonds is income.
Howard,
Consider making your grandchildren have some "skin in the game."
An 18 year old might choose the expensive private college, despite the incentives you've given them, if they don't see any direct, immediate, cash outflow from their own pocket.
If the expensive private college is $80,000, and they have to earn $8,000 (i.e., 10% is their "skin in the game") each year during summer and working during college... whereas if the quality public college is $35,000, and they have to earn $3,500 (i.e., 10% again) each year during summer and (if necessary, working during college), they might be much more likely to opt for the latter!...
and, if they choose the quality public college they'll have a much brighter financial future when they are done college since they WON'T have a lot of student loans from freshman and sophomore year that need to be repaid when they start working (like they would if they chose the expensive private college).
Hope this helps.
I appreciate how generous you're going to be to help your grandchildren!
Best,
Greg
Not if they are in a taxable account because the unexpected capital gains distributions trigger income subject to tax. One way this can ruin your planning is if you plan to have income below an additional Medicare premium threshold (IRMAA), which for a retiree is typically total income plus tax exempt interest, And the unexpected capital gains distribution can ruin such planning and you have to pay additional Medicare premiums.
Joe followed the tax law. That’s all that matters. Congress and then President G W Bush changed the law so the first 80,000 of long term capital gains are taxed at 0% for married couples. That law has not been changed.
PS I apologize that I accidentally went thumbs down on one person’s comment. I meant to do a thumbs up and I could not change it after I accidentally hit thumbs down. Professor Greg Geisler
Great article Adam! Thanks for getting this important topic into the mainstream.
After retiring from full-time work and before beginning Social Security benefits are the “golden years” for income tax planning. Taking advantage of low tax rate brackets—instead of trying to minimize tax each of those years—is a great strategy to increase wealth in the long run!
Always enjoy reading your articles. Best, Professor Greg Geisler
Comments
Jonathan, thanks for all of your helpful financial planning advice from years at Wall Street Journal through humbledollar.com! You have helped me tremendously. I recommend your “money guide” subtopics to everybody if they want to learn in one or two pages about a particular financial planning topic. Thanks for you and your site being such a great read with helpful information for all of your humbledollar.com fans! all the best to you and your family!
Post: The C Word
Link to comment from June 15, 2024
Dividends are an illusion. They are not income. The reason they are in illusion is when you receive one dollar dividends the value of the stock goes down exactly one dollar. Dividends are a psychological license to spend. They are not income the way interest on bonds is income.
Post: Foolishly Fixated
Link to comment from July 8, 2023
Howard, Consider making your grandchildren have some "skin in the game." An 18 year old might choose the expensive private college, despite the incentives you've given them, if they don't see any direct, immediate, cash outflow from their own pocket. If the expensive private college is $80,000, and they have to earn $8,000 (i.e., 10% is their "skin in the game") each year during summer and working during college... whereas if the quality public college is $35,000, and they have to earn $3,500 (i.e., 10% again) each year during summer and (if necessary, working during college), they might be much more likely to opt for the latter!... and, if they choose the quality public college they'll have a much brighter financial future when they are done college since they WON'T have a lot of student loans from freshman and sophomore year that need to be repaid when they start working (like they would if they chose the expensive private college). Hope this helps. I appreciate how generous you're going to be to help your grandchildren! Best, Greg
Post: Grandpa’s Scholarship
Link to comment from March 25, 2023
I get alot out of your articles Adam. Thanks! I want to highlight one of them--"When to Roth," a great "How To" article!
Post: Grossman’s Favorites
Link to comment from February 1, 2023
Excellent article, Adam! Very helpful!
Post: Clipping Coupons
Link to comment from December 16, 2022
Another great, helpful, informative article Adam. Thank you!
Post: Tax Dodging
Link to comment from August 24, 2022
Not if they are in a taxable account because the unexpected capital gains distributions trigger income subject to tax. One way this can ruin your planning is if you plan to have income below an additional Medicare premium threshold (IRMAA), which for a retiree is typically total income plus tax exempt interest, And the unexpected capital gains distribution can ruin such planning and you have to pay additional Medicare premiums.
Post: Does it ever make sense to buy actively managed funds?
Link to comment from June 12, 2022
Joe followed the tax law. That’s all that matters. Congress and then President G W Bush changed the law so the first 80,000 of long term capital gains are taxed at 0% for married couples. That law has not been changed.
Post: Aversion to Income
Link to comment from April 16, 2022
PS I apologize that I accidentally went thumbs down on one person’s comment. I meant to do a thumbs up and I could not change it after I accidentally hit thumbs down. Professor Greg Geisler
Post: Timing Those Taxes
Link to comment from June 19, 2021
Great article Adam! Thanks for getting this important topic into the mainstream. After retiring from full-time work and before beginning Social Security benefits are the “golden years” for income tax planning. Taking advantage of low tax rate brackets—instead of trying to minimize tax each of those years—is a great strategy to increase wealth in the long run! Always enjoy reading your articles. Best, Professor Greg Geisler
Post: Timing Those Taxes
Link to comment from June 19, 2021