Today’s top story: Why you should love
Why You Should Love Robo-Advisors
Keeping costs low and advice honest.
Taxes in Retirement: 7 Ways to Trim Your Bill
Ideas that can reduce financial stress in retirement.
How Roth IRA Taxes Work
A good investment at tax time.
How to save for the future when it’s uncertain
Preparing for a variety of outcomes.
Wednesday’s need-to-know money news
Today’s top story: How your tax refund could improve your credit. Also in the news: 5 smart ways to invest your tax refund, how the Apple Card stacks up against the competition, and how moving between states could raise or lower your tax burden.
How your tax refund could improve your credit
Using your refund strategically.
5 Smart Ways to Invest Your Tax Refund
Your refund could help fund your future.
How the Apple Card Stacks up Against the Competition
Comparing features.
Will
Dramatic swings in both directions.
Tuesday’s need-to-know money news
Today’s top story: 5 empowering tips for women on Equal Pay Day. Also in the news: 5 smart ways to invest your tax refund, 7 ways to trim your taxes in retirement, and how changes to the ACA might affect your insurance premiums.
5 Empowering Tips for Women on Equal Pay Day
It’s time to bridge the gap.
5 Smart Ways to Invest Your Tax Refund
Putting it towards the future.
Taxes in Retirement: 7 Ways to Trim Your Bill
Making your retirement a little less stressful.
How Changes to the ACA Might Affect Your Insurance Premiums
Playing the waiting game.
Why you should love robo-advisers
Robo-advisers have been around long enough that the question is no longer whether you should turn your investment decisions over to a computer. Now the question is: Why wouldn’t you?
The success of Wealthfront and Betterment, two startups that helped launch the trend, led mainstream investment companies including Vanguard, Schwab and Fidelity to add robo-advice services in recent years. Depending on the robo-adviser, you may also have access to human financial advisers, socially responsible investments and tax-loss harvesting to help reduce tax bills.
This is not, and never really was, a niche product only for tech-happy millennials. From the beginning, investors of all ages spotted the significant advantages of letting computers run their portfolios. In my latest for the Associated Press, the advantages of robo-advisers.
Q&A: Avoiding capital gains
Dear Liz: In a few years, my husband and I will sell our large primary residence and move into a smaller home for our retirement. We are both over 55. We currently rent out the smaller home and pay a mortgage on it. We will realize a small capital gain on the large residence when it is sold. Rather than use our one-time exclusion for the sale of a primary residence, can we avoid capital gains by putting the small profit toward paying down the mortgage principal on the smaller home when it becomes our primary residence shortly after selling the large house?
Answer: The ability to defer capital gains taxes on home sales and the one-time exclusion for home sale profits were repealed in 1997. Before that, capital gains taxes were typically due on home sale profits unless the homeowners bought a house of equal or greater value within two years of the sale. The exception was for people 55 or older, who could exclude up to $125,000 of home sale profit from their incomes once in their lives.
Now, when you sell a home, regardless of your age, up to $250,000 in home sale profits can be excluded by an individual or $500,000 by a married couple. You can do this multiple times, as long as you live in each home at least two of the preceding five years.
There are some issues with converting a rental property into a primary residence, however, especially if you should want to sell it someday. You should discuss this with a tax professional.
Q&A: Here’s a big mistake to avoid when planning your wedding
Dear Liz: Would you advise taking money out of your 401(k) for your wedding if you’re getting a lump sum of money within the same year and can pay the full amount back?
Answer: How about postponing the wedding until you can pay for it in cash?
That would be so much better than starting your life together “betting on the come” — in gambling parlance, counting on cards that haven’t yet been dealt into your hand. There are so many ways that can go wrong and only a few where it can go right.
The most obvious risk in borrowing from your 401(k) is that you will lose your job and won’t be able to pay back the money before the balance is deemed a withdrawal, incurring taxes and penalties. Plus, you can’t put the money back, so you’ve lost all the future tax-deferred compounding those savings could have earned.
You’re also setting a seriously bad precedent for your marriage when you borrow money for a luxury, which is what a wedding is. (You also might want to read the Emory University study that found the duration of a marriage was inversely proportional to how much was spent on the engagement ring and wedding. The more spent, in other words, the shorter the marriage.)
It’s easy to get in the habit of borrowing rather than making hard choices or having hard discussions. But a good marriage, and sound finances, requires plenty of both. Give yourselves the gift of a wedding you can afford, when you can afford it.