Posts by SmartAsset Team
Portfolio Management
How to Diversify Your Portfolio With Stocks: Tips and Strategies
Investing in stocks can be one of the most powerful ways to grow wealth, but putting all your eggs in one basket can expose you to unnecessary risk. That’s where diversification comes in. By spreading your stock investments across different sectors, company sizes and even global markets, you can reduce volatility and improve your chances… read more…
Portfolio Management
Palladium vs. Silver: Which Is Better for Your Portfolio?
Palladium and silver are two precious metals often compared by investors for their distinct roles in a portfolio. Silver has long been viewed as a store of value and is widely used in jewelry and industry. Palladium has gained attention for its applications in automotive manufacturing and its tighter supply dynamics. Price movements for both… read more…
Tax Planning
Capital Gains Exemption for Primary Residence: Tax Rules
Selling your home can have tax consequences if its value has gone up. The IRS offers an exemption that lets you exclude some of the profit from capital gains tax when selling your primary residence, as long as you meet certain rules. This can save you a significant amount of money. Knowing how the exemption… read more…
Investment Taxes
ESOP Distribution: Rules, Taxes and Payout Options
An Employee Stock Ownership Plan (ESOP) provides employees with an ownership interest in their company, but accessing those funds follows strict distribution rules. These rules govern when payouts can begin, the form they take and how they are taxed. Understanding the timelines, options and tax implications helps you evaluate the value of an ESOP distribution… read more…
Investing for Beginners
What Is an Employee Share Scheme? Types, Benefits and Taxes
An employee share scheme lets workers own part of the company, often through discounted shares or stock options. This gives employees a stake in the business while helping employers keep and motivate talent. Different schemes work in different ways, with some based on options and others on performance, but all come with specific rules and… read more…
Investment Taxes
ESPP Qualifying Disposition: Rules and Holding Requirements
An employee stock purchase plan (ESPP) qualifying disposition occurs when you meet certain IRS holding requirements before selling the stock you acquired through your company’s plan. Qualifying dispositions often get more favorable tax treatment than if you were to sell too soon, known as a disqualifying disposition. But the rules can be specific, and your… read more…
Trusts
Probate vs. Trust: How They Work and When to Use Each
When planning for the transfer of assets after death, two terms come up often: probate and trust. Probate is the court-supervised process of validating a will, paying debts and distributing assets to heirs. A trust is a legal arrangement that holds and manages assets for beneficiaries, which can allow them to bypass probate entirely. Choosing… read more…
Income Investing
Municipal Bonds vs. Treasury Bonds: Which Should You Buy?
When comparing municipal bonds vs. Treasury bonds, investors often weigh tax advantages against perceived safety. Municipal bonds, issued by state and local governments, may offer tax-free interest income at the federal and sometimes state level. Treasury bonds, backed by the U.S. government, provide reliable interest payments and strong credit security. The decision between the two… read more…
Income Investing
Treasury Bills vs. CDs: Where Should You Invest?
Investors looking for low-risk places to park cash often compare short-term options like Treasury bills and certificates of deposit (CDs). Both offer predictable returns and are widely considered safe, but they operate differently. Treasury bills are sold at a discount and mature at face value, while CDs typically pay interest at a fixed rate over… read more…
Roth & Traditional IRAs
Are Roth IRA Contributions Tax Deductible? Rules and Exceptions
With a Roth IRA, you contribute after-tax dollars, so there is no tax deduction when you put money in. The benefit comes later because your investments grow tax-free and qualified withdrawals in retirement are also tax-free. This differs from traditional IRAs, which give you a tax break upfront but require you to pay taxes when… read more…
401(k)
How to Withdraw Money From Your 401(k) Before Retirement
Tapping into your retirement savings early may seem like a risky idea, but there are many reasons why you may have to take money from your 401(k) before retirement. These accounts are meant to support you in your later years, yet unexpected financial challenges can force your hand at using your funds sooner. Before doing… read more…
401(k)
Should You Roll Over Your 401(k) to an IRA or a Roth?
When you leave a job or retire, you need to decide what to do with your 401(k). If it’s a traditional 401(k), you can move it to a traditional IRA, where taxes are paid when you withdraw, or to a Roth IRA, where you pay taxes now but withdrawals in retirement are tax-free. If it’s… read more…
Retirement Planning
How Much Should I Have in My 401(k) at Age 55?
By age 55, you’re about a decade away from retirement. Many financial experts suggest having seven to eight times your annual salary saved by this age if you want to maintain a comfortable retirement. By 55 you still have time to benefit from compounding and catch-up contributions, but not much. Knowing the benchmarks, the potential… read more…
Retirement Planning
How Much Should I Have in My 401(k) at Age 45?
Financial planners often recommend aiming for roughly three times your annual salary in retirement savings by the time you reach 45. At the same time, your mid-forties are a turning point when compounding can still work in your favor. The decisions you make now, whether you’re on track or catching up, will affect your nest… read more…
Income Investing
Fixed Annuity vs. CD: Which Should You Invest In?
Fixed annuities and certificates of deposit (CDs) are both low-risk savings vehicles that provide guaranteed returns, but they work in different ways. A CD locks in funds for a set period at a fixed interest rate, with penalties for early withdrawal. A fixed annuity, offered by insurance companies, provides tax-deferred growth and often guarantees income… read more…
Investing for Beginners
Nominal vs. Real Return: How Inflation Affects Investments
Distinguishing between nominal and real returns gives investors expanded insight into how their money grows over time. Nominal return reflects the raw percentage gain on an investment. Real return adjusts for inflation, showing the actual increase in purchasing power. Inflation can erode gains, meaning a high nominal return may not result in meaningful real growth.… read more…
Retirement Taxes
I’m 63 With $1 Million in an IRA. Should I Convert $100,000 a Year to a Roth to Avoid RMDs?
If you’re 63 years old with $1 million in a traditional IRA, you may be wondering whether converting $100,000 per year to a Roth IRA makes sense. Doing so could help you avoid required minimum distributions (RMDs) later on. This strategy may reduce your future tax burden and give you more control over your retirement… read more…
Legislation & Policy
Trump 401(k): Investment Options to Include Alternative Assets
President Donald Trump is paving the way for a significant shift in retirement investing by permitting 401(k) plans to include alternative investments like private equity, real estate and digital assets. Trump’s recent executive order aims to provide 401(k) participants with greater access to diversified investment opportunities, potentially enhancing retirement outcomes. However, these alternative investments come… read more…
Derivatives Markets
Futures vs. Forex: Key Differences and Market Examples
Futures and forex markets are both popular options for investors looking to trade financial assets, but they differ in key ways. Futures involve standardized contracts to buy or sell assets at a set price on a future date, while forex focuses on the exchange of currencies. Each market offers unique opportunities, risk factors and trading… read more…
Retirement Planning
Can a Couple Retire With $1 Million?
Retiring with $1 million is a common goal for couples, but how long it lasts depends on where they live and the lifestyle they want. For some, low housing costs, manageable healthcare expenses, and reliable Social Security benefits can help make $1 million last. Investment returns also influence how far the money will go. Others… read more…
Tax Planning
Do Capital Gains Count as Income? Tax Definition and Examples
Capital gains count as taxable income and can affect your tax bracket, deductions and rates. They are taxed as short-term or long-term gains depending on how long you owned the asset and your total income. Short-term gains are taxed at regular income rates, while long-term gains often have lower rates. A financial advisor can help… read more…
Trusts
Can You Set up a Trust Without an Attorney?
With today’s rising costs, some people consider setting up a trust without an attorney. But while online tools or DIY templates can work for simple revocable living trusts, more complex estates could benefit from professional legal help. Doing this could help you avoid potential mistakes that might delay distributions or create legal disputes among beneficiaries.… read more…
Trusts
Trustee vs. Beneficiary vs. Grantor: Estate Planning Guide
When a trust is created, three distinct roles define how it functions: the grantor, the trustee and the beneficiary. The grantor sets up the trust and contributes the assets. The trustee manages those assets according to the trust’s terms. The beneficiary receives the benefits from the trust, either through income, principal or both. Understanding how… read more…
Pensions & Other Retirement Accounts
How to Collect a Pension From a Former Employer
Many people leave behind pension benefits when they change jobs, and claiming them later can feel complicated. Fortunately, with the right information and preparation, collecting your pension is usually straightforward. The process involves confirming your eligibility, tracking down your plan if it has changed hands and selecting the best payout option for your needs. Knowing… read more…
Tax Planning
Can You Deduct Mortgage Interest on a Second Home?
Under the One Big Beautiful Bill Act of 2025, the mortgage interest deduction limits established by the Tax Cuts and Jobs Act were made permanent. For loans taken out after December 15, 2017, taxpayers may deduct interest on up to $750,000 of combined mortgage debt across primary and secondary residences. Mortgages originated prior to that date… read more…