Quote History Originally Posted By mt357:
Yes the fee is much higher than it is for my mutual fund but the savings in capitol gains tax with be over $20,000 per year so in the end I come out ahead. Hopefully.
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Help me out here: a money person wants you to put your money into an account they manage for a 0.4% fee. You want to do this to avoid $20k in taxes you pay on dividends. If your sma buys non-dividend paying stocks then you… don’t get dividends and thus don’t pay taxes on the dividends.
So you’d give up all your dividend income plus pay a higher management fee in exchange for what? The hope that the individual stocks will go up in value more than the combined value of the funds plus their dividends?
If your $20k tax bill indicates around $100k of dividend income why the rush to get rid of that income? I guess I don’t understand the whole “I want to reduce my real income to pay less in taxes”. This is all taxable money so if you need cash to pay the tax bill you can simply sell $20,000 of your mutual funds.
I’m also skeptical since the money guy has a vested interest in you switching to the sma.