One of my sisters checks her investments and cleans her financial house in December. The other one prefers to sip hot toddies and leave organization and thank-you notes for the new year. Funny thing is that both approaches could prove costly during tax season. Make sure to avoid these common tax mistakes whether you’re relaxing or making Excel spreadsheets over the next few days:
Busy-Bee Errors:
1) Buying mutual funds that pay dividends at year end Many funds distribute dividends to investors in December. Think you should buy in right before the payout? Not so fast.
Usually the share price of the fund drops by the same amount of the payout, so investors are not truly collecting anything here. They are paying taxes though; the IRS treats these dividends as taxable gains. If you want to buy a new fund before December 31st then call the fund company and make sure the fund isn’t about to pay a big dividend. (more…)
Santa Claus might reward the nice boys and girls, but it paid to be naughty in the mutual fund world this year.
Who’s on the bad-boy list? The Vice Fund, which invests in weapons, gambling, tobacco and alcohol. Yep – it only puts money into companies doing business in these four areas. And in 2007, this rebel with a cause brought home some serious loot. As of December 21, 2007, the Vice Fund had returned 19.2% for the year. (more…)
I turn off the lights when I leave a room. Sometimes I ride my bike instead of driving my car. I recycle my Vanguard statements.
Until this week, however, I had never checked whether the mutual funds I invest in through my 401(k) plan undo all these good deeds. Finally, I bucked up and screened my funds to see how socially (ir)responsible they are.
In less than ten minutes I had my answer. Here’s how I did it, in case you want to see whether your 401(k) is spreading good or bad karma in the world.
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You have some hard-earned money that you’d like to invest. Who would you feel more comfortable having manage it: the first guy pictured or the second?
I’d go with the more bookish-looking gentleman in the first photo. Turns out, however, the man behind the white shades is actually the same person pictured in the first shot: James Perkins, portfolio manager at Thrasher Funds. That’s not to be confused with Thrasher, the skateboarding magazine. He chose to list the photo on the left alongside his profile on Thrasher’s website; the other one ran with his Thestreet.com column.
Thrasher launched a mutual fund last month — the GendeX Fund – which is being marketed towards, you guessed it, Gen X and Gen Y. A group, that, according to Thrasher, looks something like this:
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I like to play financial planner when it comes to investing my retirement money.
So when I started at FiLife and was presented with a brand new retirement plan, I figured I’d use it as an opportunity to do a little check-up on my two existing 401ks and bring everything up to speed.
I’m obviously no professional, though I’ve yawned my way through plenty of dry but informative conferences for real financial advisors. Presenters there drilled the importance of diversification, rebalancing, and investing overseas into my brain. I became a proponent of investing in index funds somewhere along the way and adopted some mantras of my own. (more…)
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