Newsletter: Plan Your Way into Tax-Free Income

Let’s face it, no one likes paying Uncle Sam more than his fair share. But what if there was a way to take advantage of financial planning techniques to not only grow your savings, but also help protect your family and transfer wealth tax-free?

Sounds too good to be true, right?

Well, it’s more possible than you think. And as a highly driven individual, you likely have multiple streams of income to consider, like your salary, bonuses, stock options, and perhaps even revenue from a side hustle or business.

And with these multiple income streams and your high earnings, you’re likely setting yourself and your family up for an even higher tax liability in the years ahead unless you do something about it today.

That’s where tax planning comes in.

Now, tax planning is essential because it provides a structured approach to minimize the taxes you owe. And without adequate tax planning, you could end up paying more to Uncle Sam than necessary, which reduces the amount of wealth available to you and your family.

To be sure, the financial decisions you make today can have significant tax implications on your future wealth. That’s why understanding how to harness techniques to gain tax-free income can help you avoid paying thousands to the IRS, leave more to your family, and to ultimately make more informed financial decisions.

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August Financial Independence Topics

This month, we’re diving deep into three main topics:

  • Evaluate whether a trust makes sense for you
  • Tax shelters, tax-free financial products and asset transfers
  • Ways to calculate your life insurance need

Log in to the FI|Mastery Journey and get started on essential tasks to get your financial house in order!

The Big Questions

If you do nothing else this week, consider the following Big Questions to help keep your financial house in order:

Dive Deeper into Tax-Free Investment Accounts

How familiar are you with the specifics of tax-free investment accounts like Roth IRA, 529 Plan, and HSA? What information do you need to learn to utilize them more effectively in your financial plan?

It’s crucial that you dive deeper into the specifics of each type of tax sheltered investment account – Roth IRA, 529 Plan, and HSA. Familiarize yourself with their detailed functioning, rules, and regulations to maximize the benefits they offer.

Balance Your Portfolio with a Mix of Accounts and Securities

How balanced is your current portfolio in terms of tax benefits, risk, and return of the investment? How can you adjust your portfolio to better align with your financial goals and risk tolerance?

Make sure to balance your portfolio considering the tax benefits, the risk and return of the investment, and your financial goals. The key is to find a balance between different types of accounts and securities that matches your financial objectives and risk tolerance.

Understand the benefits of ‘step-up in basis’

How familiar are you with the concept of ‘step-up in basis’? How could this principle be leveraged to provide a tax-free inheritance for your loved ones?

Make an effort to understand the concept of ‘step-up in basis’ and how it can benefit your inheritors. This principle can eliminate potential capital gains taxes on assets that appreciated during your lifetime, providing a tax-free inheritance for your loved ones. Consider which assets might be most beneficial to bequeath, taking the step-up in basis into account.

Financial Planning Articles

  • Zen and the Art of Managing Money
  • What Netflix’s Beef Taught Me About Financial Independence
  • Don’t Forget to Swim Now and Then
  • Things vs Experiences vs Things that Create Good Experiences
  • Investing for Money vs Investing for Happiness
  • Finding Purpose in Retirement

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Analyst Corner

  • China’s Balance Sheet Recession
  • Fundamentals of Tax Planning
  • Inflation Slows – Is it Too Early to Celebrate?
  • Three Takeaways from US Earnings
  • Why Target Dates Have Underperformed
  • Quarterly Reports on Household Debt and Credit

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