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Portfolios 206: The Best Investments for Taxable Accounts

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1.
Imagine you're a tax-sensitive investor. Which is the better bond for you?
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It depends on your tax bracket. Investors in high tax brackets may benefit more from a muni--even if it has a lower yield--due to the tax break.
2.
Contributions to variable annuities grow tax-deferred until you take them out at retirement.
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True. That is one of their big attractions.
3.
A tax-managed fund can't be considered tax-managed if it contains large companies, since large companies are more likely to pay dividends than smaller ones.
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False. There are plenty of large companies that qualify to be in tax-managed funds. They simply don't need to be paying dividends.
4.
If you're considering selling an appreciated investment that you bought 11 months ago, why might it make sense to hold it another month before selling it?
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Because the capital gains tax would be lower after the 12 months. The lower capital gains tax can be quite an advantage for you.
5.
What are exchange-traded funds?
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Index funds that trade on an exchange. ETFs are generally index funds that trade like stocks on an exchange.