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Re: Shielding income from taxes.
Old 04-04-2007, 08:05 AM   #21
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Re: Shielding income from taxes.

Is there any sort of fund or other investment that would act like an intermediate term bond fund, but rather than pay dividends (taxable in the year received), roll the ~ 5%/year directly back into the NAV? That way, one could pull out principle as needed and only pay cap gains.

EX:

A $1M in a Bond fund paying 5% would pay out $50K/year - all taxable income.

$1M in a hypothetical stable 5% NAV increase fund. Take out $50K after a year, and only 5% of $50K ($2,500) is taxable as cap gains, the rest is principle. The cap gains % would increase by about 5% each year. And, you would have the flexibility to pull it in one tax year vs another if that helped your tax situation.

Zero-coupon bonds are kind of structured this way, but you still pay taxes each year on the 'imputed income', IIRC.

Any such animal? -ERD50

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Re: Shielding income from taxes.
Old 04-04-2007, 08:08 AM   #22
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Re: Shielding income from taxes.

The closest thing I can think of is *gulp* an annuity, but you give up so much that it isn't worth it. Alternatively, maybe a tax managed balanced fund or a low volatility equity fund. But if you are retired, chances are you still come out ahead after taxes with the standard portfolio choices.
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Re: Shielding income from taxes.
Old 04-04-2007, 08:39 AM   #23
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Re: Shielding income from taxes.

Thanks brewer, hmmm, the 'a' word, huh? Well, if someone was in that camp of people that would consider an annuity for that end-of-life 'insurance', maybe this tax benefit helps sway the decision a bit.

But, I'll stop there. I know it is a busy topic.

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Re: Shielding income from taxes.
Old 04-04-2007, 10:33 AM   #24
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Re: Shielding income from taxes.

Quote:
Originally Posted by jIMOh
There is a fund called Managers First Quadrant (MFQTX). It is tax efficient (as in ZERO capital gains), and has solid returns. It is a loaded fund with a $1.5 M minimum. Something to think about.

It solves your tax shelter problems.
Unless the prospectus is wrong, you need $2.5 million to get in. The ER is .99%, almost 1 percent on an insitutional fund that tries to roughly approximate the Russell 3000?

Too rich for my blood...........there's a LOT of tax-managed funds you can buy for less than .99% ER and $2,5 million to get in............
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Re: Shielding income from taxes.
Old 04-04-2007, 10:37 AM   #25
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Re: Shielding income from taxes.

Quote:
Originally Posted by brewer12345
Looks like an equity fund to me.
With almost a 1% ER and $2.5 million minimum...........
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Re: Shielding income from taxes.
Old 04-04-2007, 10:38 AM   #26
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Re: Shielding income from taxes.

Quote:
Originally Posted by FinanceDude
Unless the prospectus is wrong, you need $2.5 million to get in. The ER is .99%, almost 1 percent on an insitutional fund that tries to roughly approximate the Russell 3000?

Too rich for my blood...........there's a LOT of tax-managed funds you can buy for less than .99% ER and $2,5 million to get in............
I've seen 2.5 M as minimum and 1.5 M as minimum for loads to be waived... you can invest less with a load. I don't own this fund, but it is managed for the purpose of growing money with tax efficiency- it has not paid a gain out in 2+ years- and it has grown xx% (double digit) for last 3-4 years.

Not a good choice or bad choice, just something for OP to think about.
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Re: Shielding income from taxes.
Old 04-04-2007, 10:46 AM   #27
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Re: Shielding income from taxes.

Quote:
Originally Posted by jIMOh

but it is managed for the purpose of growing money with tax efficiency- it has not paid a gain out in 2+ years- and it has grown xx% (double digit) for last 3-4 years.
I have not done a screen for this, but I would think a number of ETFs would fit that description also? If they are in the market, and hold low/no dividend paying stocks, that would do it. No?

'course, if the market goes negative XX% next year, the ETF (and maybe this fund) would also.

-ERD50
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