Today’s Prep:

David answers three listener questions, including one on saving for a wedding. He also tackles questions on IRAs and the tax implications of selling a stock.

(Click the featured times below to jump forward in the episode)

Equipping Points:

[0:50] Saving for a Wedding

• Jerry has two daughters in their mid-twenties who will probably have weddings soon. He wants to know a good way to invest money for things like weddings when you’re not sure when you’ll need it?
• David says if you know you’ll need the money in the next 12-18 months then you should keep the money safe.
• If you think it’s two to three years away and you can handle some risk, you can take some of that money and put it into a diversified stock portfolio.
• If you feel uncomfortable with the risk, keep it safe.
• Enjoy those weddings as a father (from a father of three daughters)!

[3:07] Selling Stock 

• Kate in Olathe has some Apple stock she wants to sell but is worried about the tax bill. Which is more important, capturing gains or keeping taxes low?
• If you are in the 10-12 percent Federal tax bracket then your long-term capital gains rate is zero.
• Get some good tax advice that is specific to you.
• If you don’t need to sell it, you can pass it onto your heirs who will get a step-up cost basis and won’t have capital gains.
• If a third or a half of your financial wealth is in this Apple stock, then forget about the tax implications and take a bunch of that risk off the table by selling that stock.
• If you’re over-allocated into one particular kind of stock, you should diversify.

[5:39] Unsuccessful IRA

• Alec in Lawrence says their IRAs haven’t made much money recently. What’s going on?
• You may be heavily allocated in bonds.
• You may have a variable annuity with 3 percent or more in fees each year.
• Always ask your advisor to explain your portfolio’s performance.

Today’s Takeaway: