On page 83 of your text, Answer Question L06, #10.
Explain the key elements of effective Tax Planning.
*The key elements of effective tax planning are analysis of finances.
*What are some of the most popular tax planning strategies according to the text?
* Also Based on your personal goals for your own life, how would tax planning benefit you, and what strategies do you think would benefit you the most?
On page 108 of your text, Answer Question L01, #1.
After answering that question, search bank rates on the internet and list two banks whose interest rates you like, and list their rates.
Also discuss why you chose the two that you did.
FYI- I do want to one day start my own business and retire from my current job.
Effective Tax Planning & Adapting to a Low Interest Rate Environment
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Effective Tax Planning & Adapting to a Low Interest Rate Environment
Question L06, #10.
Tax planning is very critical for the success of a financial plan. According to Kagan (2021), “tax planning is the analysis of a financial situation or plan to ensure that all elements work together to allow you to pay the lowest taxes possible”. Tax efficiency is one crucial element of tax planning because it allows for attention to be placed on after-tax returns and tax consequences. Secondly, new opportunities should be considered to keep tax liabilities at bay. A Bird’s Eye View helps put tax portfolios and plans on track. Monitoring of the changes in the tax laws on federal and local levels is essential in determining how they can affect taxes now and in the future. Various strategies, such as the utilization of tax-efficient investment vehicles, tax-efficient withdrawals, tax-loss harvesting, and a variety of investment accounts can be applied to ensure efficiency in tax planning. Tax planning helps reduce tax liability and maximize the ability to contribute to the retirement plan (Kagan, 2021). In my case, I would apply strategies such as engaging in tax gain-loss harvesting or saving for retirement in an IRA.
Question L01, #1.
Low-interest rate environments occur when the risk-free rate is set lower than the historical average (Chen, 2021). This is much more of the time we currently live. For instance, in the early part of 2000, the average US federal funds rate was around 6% but has so far reduced to 0.09% in 2020 (Paden, 2021). Such an environment favors borrowers at the expense of lenders and savers. To survive and thrive in such an environment, the couple can consider online saving accounts because their offers are a bit higher compared to those of traditional bank savings accounts (TeamHewins, 2021). Secondly, they can choose a fixed-rate mortgage instead of a lower interest adjustable-rate mortgage because the rate is locked for the entire pay-off period, hence not affected by market fluctuations (thrivent, 2019). Additionally, they can consolidate their loans to help lower the interest rate and reduce the number of bills paid in a month.
Marcus By Goldman Sachs – APY is 0.5%
BrioDirect APY is 0.55$ (Goldberg, 2021)
I prefer these banks because they charger higher rates compared to most of their counterparts.
References
Chen, J. (2021). Low Interest Rate Environment. Investopedia. https://www.investopedia.com/terms/l/low-interest-rate-environment.asp
Goldberg, M. (2021). Best savings accounts for October 2021. Bankrate. https://www.bankrate.com/banking/savings/rates/
Kagan, J. (2021). Tax Planning. Investopedia. https://www.investopedia.com/terms/t/tax-planning.asp
Paden, R. (2021). Where to invest when interest rates are low – 6 fixed-rate vehicles that offer the best returns. Business Insider Africa. https://africa.businessinsider.com/personal-finance/where-to-invest-when-interest-rates-are-low-6-fixed-rate-vehicles-that-offer-the-best/5hnedcl
TeamHewins. (2021). 5 Essential Elements of Tax Planning with a Financial Advisor. https://teamhewins.com/5-essential-elements-of-tax-planning-with-a-financial-advisor/
thrivent. (2019). 9 ways to take advantage of today’s low interest rates. https://www.thriventfunds.com/insights/investing-essentials/9-ways-to-take-advantage-of-todays-low-interest-rates.html