The lure for those fortunate enough to have highly appreciated company stock in their 401(k) is to pay lower taxes by utilizing what is called Net Unrealized Appreciation (NUA). To do so, it takes a triggering event: reaching age 59 ½, separating from service, becoming disabled, or death. NUA’s tax advantage stems from lower long-term capital gains rates on the stock’s appreciation. By contrast, if the company stock is sold within the 401(k), the withdrawal is taxed at a higher income tax rate. In the example below, the income tax rate is in the 33% tax bracket which appears relatively high.

Financial Crisis 10 Years after: Lessons to Remember

Early October 2007 marks the 10-year anniversary of the S&P 500 reaching a high point. It then lost more than half its value during the global financial crisis. In the coming weeks, the financial news media is likely to examine how today’s environment compares to the period leading up to the 2008 crisis. It is difficult to draw useful conclusions based on observations and opinions: market forecasters focusing on the short-term will “fill your ear but will never consistently and systematically fill your wallet.”

Financial markets have a habit of behaving unpredictably in the short run. There are, however, important lessons to take away:

Increase Performance by Reducing Investment Costs in 5 Steps

Costs matter. Whether buying a car or selecting an investment strategy, costs are likely to be an important factor. When you buy a car, for example, the sticker price tells you approximately how much you can expect to pay. But the sticker price is only one part of the overall cost of owning a car. Sales taxes, insurance, routine maintenance costs, and the potential cost of unexpected repairs are also important. When investing in mutual funds, less familiar investment costs need to be considered for evaluating the overall cost effectiveness of a strategy.

Investment Lessons from 2017 Mutual Fund Track Record Report

Investors should be aware of the poor collective performance of U.S.-based mutual fund managers actively picking stocks and bonds. This conclusion is clear in the latest Dimensional Fund Advisors’ Mutual Fund Landscape report. It features a graphical view of the number and performance of stock and bond funds at 5, 10, and 15 year intervals. The track record is poor.

Key points include:

  • Less than half of the stock funds survived over 15 years. The rest have merged or closed. Poor performance is often the culprit.
  • Fewer than 1 in 5 stock funds outperformed their benchmarks over 15 years.
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