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Two points to ponder under new tax law changes
Now that President Bush has signed the new tax law it’s time for investors and their money managers to review portfolio allocations.
Of interest is the new 15% rate for dividends and long-term capital gains and how that affects your after-tax return. Two quick points:
1) It is now even more important to consider the dividends paid when making stock selection
2) It becomes more important to generate long-term gains (taxed at 15%) rather than short-term (taxed at income rates)
Bonds, which pay interest, or mutual funds that are typically more actively traded (and incur short-term gains), are better investments for your 401(K), IRA or other tax-deferred account. Higher dividend stocks or stock funds and index funds are better investments for taxable investment accounts.
While those basics haven’t changed, the new tax law makes them even more important! We are in the process of reviewing all of our portfolios and would welcome any comments or questions.
A Financial Update courtesy of Dean Mailhes & Vaughn Antley of Argent Financial Group, Inc
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