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Tax benefit on ULIPs over Mutual Funds
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Investing 30-40k monthly through SIP in ULIPs or Mutual Funds over 5 years.
Talked to Policy Bazaar guy, and he recommended to go for ULIPs over MF due to the LTCG tax not being applicable to ULIPs. ULIPs and LTCG
Seeing the over 23% return (annualized over 5 years) for Bajal Allianz Accelerator Mid-Cap Fund II, I was thinking to go for it.
My doubt is will the returns from mid-cap and large-cap mutual funds be enough to surpass the better performing ULIPs despite the LTCG tax. If not I think ULIP should be the way to go.
EDIT: Bajaj ULIP Features
Bajaj ULIP Performance
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Are you sure that there will be no LTCG Applied to ULIPS in the future?
Transferring ISA funds to LISA tax limit question
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If I have hit the £20k tax free ISA limit this tax year, am I still able open a LISA and transfer over £4k?
I did contact my bank but the operator didn't fill me with confidence in his answer.
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Nope you'll have to wait until April for the new tax year.
The deets: https://www.gov.uk/individual-savings-accounts
Edit: I was wrong and should not have been rushing.
When are mutual funds worth the capital gains tax?
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I'm new to investing. All of my money is in my TFSA. I put 50k in a GIC for a year at 4.05% (which was the best option at the time). I have a good amount left outside of the GIC still in my TFSA. I'm considering investing in a mutual fund with some of it. My question is about the capital gains tax on the interest and/or dividends. How much would I need to invest to make a mutual fund a better option than a GIC (which I don't have to pay interest on because it's invested from my TFSA). If I'm missing something in that question please let me know.
Edit: I didn't realize that there are other investments that can be done within a TFSA besides GICs. I will look into EFTs. Thank you for your feedback!
Top Comment:
Mutual funds are never "worth it", unless you're the bank making money off the client
Convert Fidelity Mutual Funds to Fidelity ETF tax-free?
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I hold Fidelity mutual funds like FSPTX with significant unrealized gains. Does Fidelity have any plans to allow tax-free conversions to ETFs, like Vanguard does for its mutual funds or other index funds? This would be a huge benefit for investors like me.
Top Comment: Thanks for reaching out, u/bfhu79 . We appreciate you posting for the first time and welcome you to the community. While we do not currently offer the ability to convert mutual funds to ETFs tax-free, I'm happy to pass along feedback on this to the appropriate team for consideration. Be sure to check out our viewpoint article below. It reviews key factors to consider when deciding between a mutual fund and an ETF. ETFs vs. mutual funds: Cost comparison I want to thank you again for stopping by and hope you'll continue to post any questions or suggestions you may have in the future. Hope to talk to you again soon!
Distributing Bond Funds Exempt of Reynders Tax
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In theory, distributing bond funds (ETFs in particular) are exempt of Reynders tax (capital gain tax) if the fund explicitly states that all its revenues are distributed as dividends to share holders.
See https://www.reddit.com/r/BEFire/comments/14u5t71/two_little_known_facts_about_the_reynders_tax for some details on the topic and references to sources.
Do you have examples of such funds?
- Do zero coupon bond gains (or more generally gains of bonds issued below par value) count as revenue not distributed as dividends?
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Un fond d'assurances pension branche 23 Luxembourgeois par exemple, aucune idées pour une assurance pension belge?
Best way to invest in index funds in terms of tax?
Main Post: Best way to invest in index funds in terms of tax?
Top Comment: Unless you have a very high income, a partner with am income very different to yours, a business, or are in a profession when you can be personally sued, there's no reason to use a trust. You can minimise tax by choosing investments that have minimal distributions if you really care, but paying tax is unavoidable. Stake is $3 for trades up to 30k. Cmc markets has 1 free trade per day under 1k. Both are chess sponsored. DYOR though.
What is the tax implication of selling a mutual fund and using it to buy more funds?
Main Post: What is the tax implication of selling a mutual fund and using it to buy more funds?
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You pay ALLLL that taxes. Sounds like mostly long term capital gains.
is it a situation where I'll potentially end up paying tens of thousands of dollars that I wouldn't if I kept everything in VTSAX?
Yes, this is what will happen. What you do with the proceeds is irrelevant. What matters is that you took a capital gain when you sold. Selling is the trigger, not what happens afterward.
Where does an investor see the ETF vs Mutual Fund tax efficiency?
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Trying to understand how I as an investor see the efficiencies cited in ETFs & Tax Efficiency. I get that an EFT handle buys & sells differently than a mutual fun as cited in the article. Just not clear where I see these differences after I make a sale and file taxes. I have been using a tax preparer for a few decades, but I do not recall any details beyond the cost basis.
I also expect for an HSA, Roth IRA or 529a these details are moot. And the tax efficiencies are only taken advantage of when EFTs are in a brokerage or 401k account where you are taxed on withdraws. And my 401k does not have EFT options as far as I know.
What am I missing?
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Just not clear where I see these differences after I make a sale and file taxes.
You won't because this is not where the difference lies. Capital gain distributions are reported on 1099-DIV, not 1099-B. They do not happen when you sell, but rather when the fund distributes CGD at the end of a calendar year, if at all.
Nowadays, both mutual funds and ETFs issuers do a better job of avoiding CGDs. A well run mutual fund tracking the same index as an ETF tracking the same index might not see any CGD for years.
Does the income tax paid on Social Security benefits get deposited into the Social Security trust funds or is it lumped in with all other taxes collected?
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In other words, is the AARP correct or not? And is there an IRS.gov site that confirms this? Not looking for opinions, but something official and I don't know how to find it on the IRS or any legislative site. Was that part of the original legislation? It is so contrary to the way FICA/OASDI taxes were credited and how other income tax is divvied out, at least the way I always understood it.
5. Taxes on benefits help pay benefits.
By law, federal income taxes collected on benefits go into the government’s Social Security and Medicare trust funds, meaning they contribute to future benefit payments.
Income taxes on benefits paid out in 2022 added $48.6 billion to Social Security’s coffers, accounting for about 4 percent of the program’s revenue, the vast majority of which comes from payroll taxes levied separately on most U.S. workers’ earnings.
Top Comment: I don't understand what you are asking. Are you asking if the funds collected by the IRS for social security and medicare go into the dedicated trust finds for those programs? https://www.investopedia.com/terms/s/social-security-trust-fund.asp
What’s the best total U.S. stock market ETF to buy on Fidelity? And aren’t ETFs more tax efficient than mutual funds?
Main Post: What’s the best total U.S. stock market ETF to buy on Fidelity? And aren’t ETFs more tax efficient than mutual funds?
Top Comment: Total US stock market ETFs and index funds from major brokerages have very similar historical returns. Tax efficiency shows minor variation, but does not show a bias towards ETFs. An example is below. FSKAX, VTSAX, and VTI have identical returns. FZROX (zero fund) is a bit higher, which relates to slightly different composition from the others. The mutual fund VTSAX is listed as most tax efficient (lowest tax cost ratio). The ETF ITOT is listed as least tax efficient (highest tax cost ratio). FZROX -- 5-year CAGR = 16.87%, Tax Cost Ratio = 0.42% FSKAX -- 5-year CAGR = 16.72%, Tax Cost Ratio = 0.44% VTSAX -- 5-year CAGR = 16.72%, Tax Cost Ratio = 0.37% VTI -- 5-year CAGR = 16.71%, Tax Cost Ratio = 0.41% ITOT --5-year CAGR = 16.67%, Tax Cost Ratio = 0.53%