The unified credit, also known as the federal estate tax exemption or the basic exclusion amount, is a tax provision in the United States that allows individuals to transfer a certain amount of assets to non-spousal heirs without being subject to federal estate tax. The unified credit effectively exempts a certain amount of an individual's estate from federal estate taxes upon their death.
The amount of the unified credit is subject to change and is set by the Internal Revenue Service (IRS) each year. It's designed to adjust for inflation over time. For example, in 2024, the federal estate tax exemption is $13,610,000 per individual or $27,220,000 for a married couple filing jointly. Amounts above this exemption threshold are subject to estate tax, which is a tax on the transfer of the estate of a deceased person.
It's important to note that state estate tax laws may differ, and some states have their own estate tax exemptions and rates. Therefore, individuals should consult with a tax professional or attorney to understand how the unified credit applies to their specific situation and any relevant state laws.
#unifiedcredit #estateplanning #federalexemption #estatetax #IRS
An ETF, or Exchange-Traded Fund, is an investment fund holding a basket of stocks, bonds, or commodities. ETFs are similar to mutual funds in many ways, with two key differences:
- Trading: ETFs trade on secondary exchanges and their prices change throughout the day, just like individual stocks. Mutual funds are only bought and sold at the end of each trading day based on the closing net asset value (NAV) of the underlying holdings.
- Tax Efficiency: ETFs typically generate less tax liabilities than similarly structured mutual funds. This is largely because ETFs trade on secondary exchanges.
ETF investors typically sell their shares in the open market when they choose to exit the fund. Conversely, mutual fund managers must unload underlying positions each time investors want to redeem their money. The resulting tax consequences are distributed across all investors in the mutual fund.
ETFs can provide low-cost exposure to a diversified portfolio of assets. Their unique structure allows for easy buying and selling throughout the trading day. Many ETFs track a defined index, such as the S&P 500 or Dow Jones Industrial. However, there are also many ETFs that target certain sectors, industries, or themes.
#ETF #investments #taxefficiency #diversification #portfolio
The Analogy
If the title has a familiar ring to it, you may be recalling the admonition heard so often decades ago: “It’s 11 o’clock, do you know where your children are?” The safety of our children is always a concern. Where they are, where they are going and who they are with are important considerations, always. The safety of your portfolio obviously doesn’t rise to the level of the safety of your children, but it is important to know where it is, where it is going and who it is with. (By “who”, we do not mean your investment advisor, broker, or management firm as you will see below.)
Where is My Portfolio?
What return can I expect from it? How much risk exposure do I have? Is it efficient? What does efficient even mean?
An efficient worker is more productive than one who is not. An efficient process improves productivity. An efficient portfolio is also more productive as it improves return for every unit of risk assumed. An optimized efficient portfolio is expected to give you the most bang (return) for your buck (risk).
Your portfolio’s expected return, risk, and efficiency are all measurable. You can discover “Where it is.” (Read on.)
The Federal Reserve, often called the Fed, is the central banking system of the United States. Established in 1913, its primary goals are to promote maximum employment, stable prices, and moderate long-term interest rates. Fed actions are termed monetary policy. The Federal Reserve includes a Board of Governors, twelve Federal Reserve Member Banks, and the Federal Open Market Committee (FOMC).
The Fed has three primary tools to achieve its objectives: open market operations, discount rate adjustments, and reserve requirements.
- Open market operations occur when the Fed buys and sells bonds to influence the money supply nationwide. When the Fed sells bonds, investors temporarily exchange their cash for securities offering modest returns. When the Fed buys bonds, this cash is returned to investors and the available money supply increases.
- The discount rate is the interest rate the Fed charges member banks for loans. A higher discount rate slows lending activity and limits currency circulation. Conversely, a lower discount rate encourages new loans and bolsters the money supply.
- Reserve requirements are the minimum amounts that member banks must hold for consumer withdrawals. Their key purpose is to promote stability in the banking system. Reserve requirements also influence lending practices and the overall money supply.
The Board of Governors are nominated by the President and confirmed by the Senate for staggered fourteen-year terms. This process is intended to insulate Fed officials from changing political tides and partisan pressures.
#federalreserve #fed #centralbank #interestrates #discountrate
