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What Is an Expense Ratio?
  + stars: | 2023-07-24 | by ( E. Napoletano | ) www.wsj.com   time to read: +8 min
The easiest way to think of the expense ratio is the fee you pay to the portfolio manager of your mutual fund. When you invest in an ETF or mutual fund, the fund’s prospectus will state its expense ratio. How expense ratios impact investment returnsBefore you can look at how expense ratios impact your investment returns, it helps to understand what an average expense ratio looks like. While the average active stock fund’s expense ratio was 0.66% in 2022, the average bond fund charged just 0.44%, according to ICI. Remember: It should be easy to find the fund’s expense ratio.
Persons: it’s, Chloe Wohlforth, Russell, Warren Buffett, Peter Lynch —, Merrill Lynch, Morgan Stanley, Justin McCurdy, , , you’re, McCurdy Organizations: Investment Company Institute, ICI, BuySide, SEC, Morningstar Locations: , New York, U.S, Angeles
If you're 50 or older, you can funnel extra money into your 401(k), known as "catch-up contributions." But starting in 2024, higher earners can only make 401(k) catch-up contributions to after-tax Roth accounts, which don't provide an upfront tax break but the funds can grow levy-free. Fund pretax catch-up contributions for 2023Guarino urges higher earners to fund pretax catch-up contributions in 2023 while they still can because it provides a bigger tax break. Change provides tax diversificationWhile some higher earners will lose a tax break, the catch-up contribution change is "not necessarily a bad thing," according to Dan Galli, a CFP and owner at Daniel J. Galli & Associates in Norwell, Massachusetts. Preparing for the catch-up contribution change
Persons: Peter Cade, deferrals, Roth, Jim Guarino, Baker Newman Noyes, Guarino, they've, Dan Galli, Daniel J, Galli, John Loyd Organizations: Getty, Galli & Associates Locations: Woburn , Massachusetts, Norwell , Massachusetts, Fort Worth , Texas
Remember when you resolved back in January to spend less and save more in 2023? Summer can be a good time to revisit those goals, financial advisers say. Think of it as “New Year’s in July.”A quick financial review now makes sense because there’s still time to make adjustments if you’re falling behind on your goal — whether it’s building an emergency fund, slashing credit card debt or resuming student loan payments, now that the pandemic pause is finally (really!) Many events that lead to spending, like back-to-school time (supplies and clothing), Halloween (costumes and candy), Thanksgiving (food) and the winter holidays (gifts), are coming up. “So it’s a really good time to prepare for spending later in the year,” said Yanely Espinal, author of the book “Mind Your Money.”Nate Hoskin, a certified financial planner in Denver who focuses on young adults, recommends a personal “audit.” If that sounds too much like something the Internal Revenue Service would do, think of it instead as a financial health “checkup.”
Persons: , Yanely Espinal, ” Nate Hoskin Organizations: Year’s, Internal Locations: Denver
The Powerball jackpot reached $1.08 billion on July 19, 2023. Joe Raedle | GettyIt's official: There's a winner for the $1.08 billion Powerball jackpot — and the taxman will take a hefty cut. Last-minute ticket sales pushed the jackpot to $1.08 billion from $1 billion. The winner can choose between a 30-year annuitized prize of $1.08 billion or a lump sum payment of $558.1 million. If they choose the $558.1 million cash option, the 24% withholding automatically reduces the prize by about $134 million.
Persons: Joe Raedle, John Loyd, Loyd Organizations: Getty, State Lottery Association Locations: California, Fort Worth , Texas
You also may find more time to review your financial goals and decide whether you need a reboot. Here are three key actions financial experts suggest you take midyear. Oscar Wong | Moment | Getty Images"Make practice payments to yourself," said Corbin Blackwell, a CFP and senior financial planner at Betterment. Check your tax withholdingTo avoid having too little tax withheld from your pay and facing an unexpected tax bill or penalty at tax time next April, check your tax withholding. Adjusting your tax withheld now can also help with your cash flow and ensure you receive a bigger paycheck and smaller refund at tax time.
Persons: Stacy Francis, , Jordan Awoye, Oscar Wong, Corbin Blackwell, Tim Maurer, Blackwell Organizations: Francis Financial, Awoye, CNBC, IRS Locations: New York, Bay Shore , New York, Atlanta, Charlotte
Here are five red flags money experts see when creating financial plans for their clients, and what to look out for if you want to be smarter with your own money. Plus, young people may be especially susceptible to overspending, Emily Safford, a certified financial planner and wealth advisor at Girard, a Univest Wealth Division, based in Pennsylvania, tells CNBC Make It. "[Credit card debt] can snowball and get out of hand very quickly and when you're young, you're putting yourself at a real disadvantage moving forward." "If you're not feeling confident and you're feeling overwhelmed, that's a perfect time to seek out the assistance of a planner," VanderLinde says. But beware: You may spot a number of red flags when looking for the right financial professional.
Persons: Emily Safford, Girard, Safford, Annette VanderLinde, VanderLinde, they're, you'll, you've, Fernando Reyes, they've, Reyes, that's, It's, Procrastinating Organizations: CNBC, Liberty Wealth Advisors, Prime Capital Investment Advisors Company, Wealth Locations: Pennsylvania, Torrance , California
Scott Olson / GettyThe Powerball jackpot has ballooned to an estimated $1 billion, raising the stakes for the next drawing at 10:59 p.m. It's the third-biggest prize in the game's history — falling behind the record $2.04 billion jackpot in November and $1.586 billion prize from 2016, according to the Multi-State Lottery Association. More than $124 million immediately goes to the IRSBefore seeing a penny of the jackpot, winners pay a sizable tax withholding. However, Loyd warns the 24% withholding won't cover the entire tax bill because the prize pushes the winner into to the 37% tax bracket. After the 24% federal withholding, the jackpot winner's tax bill depends on several factors but could easily represent millions more.
Persons: Scott Olson, John Loyd, Loyd Organizations: State Lottery Association, IRS Locations: Fort Worth , Texas
Supporters of student debt forgiveness demonstrate outside the U.S. Supreme Court on June 30, 2023, in Washington, DC. Student loan forgiveness is federally tax-free through 2025 because of a provision from the American Rescue Plan of 2021, Biden's $1.9 trillion Covid-19 stimulus package. While the Tax Foundation estimated that seven states could tax student loan forgiveness in August 2022, it's still possible to see legislative changes. "No one wants to be the state that's taxing loan forgiveness," Miller added. While public service loan forgiveness has always been tax-free, the current taxation for income-driven repayment plans is only temporary.
Persons: Olivier Douliery, Biden, Ethan Miller, Miller, it's, Becca Craig, Lee Reams Sr Organizations: U.S, Supreme, AFP, Getty, American, Planning, Progress, D.C, Tax Foundation, Strategic Wealth Locations: Washington ,, Washington, Kansas City , Missouri
A real estate agency window in Alicante, Spain. Sopa Images | Lightrocket | Getty ImagesMore Americans are flocking to Spain for longer, whether as so-called digital nomads working abroad or to enjoy a new life in retirement. In addition, the home prices that grew the most in the same period were paid by Americans, according to the report. According to the General Council of Notaries report, American buyers are focusing on urban areas like Madrid — as with any big city, people are attracted to its job opportunities and amenities, said Ingrim. However, Americans who want a different retirement or remote work experience and an adventure by relocating to Spain should take a few factors into consideration.
Persons: Danes, Cash, Alex Ingrim, Chase Buchanan, Jude Boudreaux, Ingrim, Boudreaux, doesn't Organizations: Getty, General, Finance, CNBC's Locations: Alicante, Spain, Florence, Italy, Madrid, Andalusia, Valencia, Europe, U.S, New Orleans, American, Portugal, Spanish
Justin Sullivan | Getty ImagesThe Powerball jackpot has soared to an estimated $900 million after Saturday's drawing went by without a winner. If you choose the $465.1 million cash option, the 24% withholding automatically reduces your prize by roughly $111.6 million. "The 24% [withholding] is not the only tax bill" because the highest federal tax bracket includes another 13%. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income. The jackpot winner's remaining tax bill after the 24% federal withholding depends on several factors but could easily represent millions more.
Persons: Justin Sullivan, It's, John Chichester Jr, Chichester, it's Organizations: Chichester Financial Group, IRS Locations: Phoenix
Powerball's projected jackpot is $875 million — the third-highest ever – ahead of Saturday's draw. While most ticket holders daydream about defying the odds and winning the prize, many don't know what steps they should take immediately after winning all that money. Until you claim the prize, the ticket will be worth hundreds of millions of dollars, which will make you a target for scammers. "Not to mention the risk to your family's personal safety." Keep the ticket secureKeep your winning ticket in a secure location, preferably in a safety deposit box at your bank, or in a personal safe.
Persons: Amy Hubble, it's Locations: Oklahoma City
If you choose the $441.9 million cash option, the 24% withholding automatically reduces your prize by roughly $106 million. "The 24% [withholding] is not the only tax bill" because the highest federal tax bracket includes another 13%. Here's how federal tax brackets workWhile inflation increased the federal income tax brackets for 2023, millions from the lottery still pushes the winner into the 37% bracket. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income. The jackpot winner's remaining tax bill after the 24% federal withholding depends on several factors but could easily represent millions more.
Persons: Scott Olson, John Chichester Jr, Chichester, it's Organizations: Chichester Financial Group, IRS Locations: Phoenix
mapodile | E+ | Getty ImagesAfter a more than three-year payment pause, federal student loan bills will once again be part of Americans' lives this fall. Indeed, a recent survey conducted by Trellis Company found that holders of student loan debt experienced key distress indicators at higher rates compared with all survey respondents. What is student loan identity? Student loan expert Ryan Law, a CFP and professor at Utah Valley University, said he has witnessed student debt anxiety, and denial, among current college students. "What I've generally found is that most people don't really want to know a lot of information about their student loans."
Persons: Cheryl, Kristy Archuleta, " Archuleta, Lazetta Rainey Braxton, Braxton, Ryan Law, Joe Organizations: Trellis Company, University of Georgia, CNBC's, Utah Valley University, Consumer Financial, Bureau, U.S, Supreme
People in their 40s may not be saving enough for retirement. Ideally, you should aim to have around three times your pre-tax salary saved for retirement by the time you enter your 40s in order to maintain your current lifestyle in retirement, according to Fidelity Investments. This means if you're in your 40s and earn $60,000 annually, you should aim to have around $180,000 already saved for retirement, for example. Median weekly earnings for Americans ages 45 to 54 is $1,239 or about $59,472 annually. Here are two retirement saving tips to keep in mind.
Persons: haven't, Marguerita Cheng, Cheng Organizations: Fidelity Investments, CNBC, Bureau of Labor Statistics, Blue
What cooling inflation means for your Series I bonds
  + stars: | 2023-07-13 | by ( Kate Dore | Cfp | Andrew Graham | ) www.cnbc.com   time to read: +2 min
Jetcityimage | Istock | Getty ImagesAs inflation falls, investors are weighing whether to buy or sell Series I bonds amid other competitive options for cash. "Cooling inflation means that interest rates are likely near the end of their increases," said certified financial planner Ted Haley, president of Advanced Wealth Management in Portland, Oregon. But in the meantime, many investors are waiting for the Federal Reserve's next interest rate decision later this month, which may affect cash yields. While the yearly rate fell to 4.3% in May 2023, the fixed rate portion climbed to 0.9%, making the asset more attractive for long-term investors. Of course, the next fixed rate for I bonds could be higher or lower.
Persons: Ted Haley, Haley, David Enna, Enna, Ken Tumin, DepositAccounts.com Organizations: Istock, Getty, U.S . Bureau of Labor Statistics, Advanced Wealth Management, Federal Locations: Portland , Oregon
There's a key tax deadline approaching for past-due filers, with an estimated $1.5 billion in unclaimed refunds up for grabs. Nearly 1.5 million taxpayers still have pending refunds from 2019, with a median payment worth $893, according to the IRS. The last chance to file or amend 2019 returns to claim your money is July 17. Filing 2019 returns could yield "thousands of dollars," Lucas said, especially for those claiming the so-called earned income tax credit, a tax break for low- to moderate-income workers. The earned income tax credit is "refundable" because you'll still qualify for a refund when the credit exceeds taxes owed.
Persons: Tommy Lucas, Moisand Fitzgerald Tamayo, Franklin, Lucas, you'll Organizations: Finance Locations: Orlando , Florida
Meanwhile, preferred securities can see yields around 7%. The Fed's rate hikes also sweetened yields on money market funds and certificates of deposit . Yet what is the best avenue for someone who is looking to generate the most income on a $10,000 investment — without taking on a lot of risk? The ICE BofA Fixed Rate Preferred Securities index, which tracks the performance of fixed-rate preferred securities, has a yield to maturity of 7.1%. "Right now you can't do better … than just owning short- to intermediate term high-grade fixed income," he said.
Persons: There's, Tom Graff, Mitch Goldberg, Goldberg, laddering, you'll, Ian Weinburg, Weinberg, Tim Ghriskey, Snyder, haven't, Ghriskey, Bonds, he'd, Graff Organizations: Treasury, Federal Reserve, Federal, CNBC Pro, Family Wealth, Pension Management, Ingalls, ICE, Securities, Citigroup, XIII, Index, SEC Locations: Baltimore, Melville , N.Y, Woodbury , N.Y, New York, Treasurys, preferreds
You might want to know how to win the lottery — especially as the Powerball jackpot jumps to a $750 million payout. Stefan Mandel, a Romanian-Australian economist, developed a formula that's allowed him to win the lottery 14 times. You're four times as likely to be struck by lightning than to win the lottery. Those odds apparently don't apply to Stefan Mandel, a Romanian-Australian economist who's won the lottery 14 times, The Hustle reported in a feature story about the mathematician. You can no longer buy lottery tickets in bulk and print your tickets at home — two key parts of Mandel's formula.
Persons: Stefan Mandel, It's, who's, Mandel's, Robert Pagliarini, Pagliarini, Mandel Locations: Romanian, Australian, Romania, Israel, Australia, Vanuatu, South Pacific
The Powerball jackpot has reached $725 million by July 11, 2023. If you choose the $366.2 million cash option, the 24% withholding automatically reduces your cut about $88 million. However, many taxpayers wrongly assume they're off the hook after that 24%, Chichester said. watch nowHere's why: Millions in lottery winnings will push you into the top federal income tax bracket. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
Persons: John Chichester Jr, Chichester Organizations: Medianews, Getty, Chichester Financial Group Locations: Phoenix
Instead, she jotted down her wishes on two handwritten wills — one dated in 2010 and another in 2014. The legal dispute over the estate was between her sons, who disagreed over which handwritten will should govern their mother's estate. One son, Ted White II, thought the 2010 will should control the estate, while two other sons, Kecalf Franklin and Edward Franklin, favored the 2014 document, according to the Associated Press. That may also happen if a decedent owns property in "joint tenancy," whereby two or more people own the property together, Douglas said. This legal arrangement dictates that the surviving spouse inherits the account, taking precedence over the language in a will, Douglas said.
Persons: Aretha Franklin, Dimitrios Kambouris, Aretha Franklin's, Franklin didn't, Franklin, Ted White II, Kecalf Franklin, Edward Franklin, Richard Behrendt, , Charlie Douglas, Douglas, Behrendt Organizations: Getty, Associated Press, HH, Investments Locations: New York City, Franklin's Detroit, Bloomfield Hills, Michigan, Atlanta
The Powerball jackpot for July 10, 2023 has hit $650 million. Here, a cashier at a 7-11 store in Milipitas, California, issues Powerball tickets in 2022. With no winner for the Powerball jackpot, the prize has jumped to an estimated $650 million ahead of Monday's drawing. The jackpot jumped to $650 million from $615 million without a winning ticket on Saturday. If you beat the odds, you can now pick between a lump sum of an estimated $328.3 million or annual payments worth $650 million.
Persons: Roth, John Chichester Jr, Chichester Organizations: IRS, Finance, Amazon, Chichester Financial Group Locations: Milipitas , California, Phoenix
And the ring bearer — if they choose to sell the "precious" — may owe a hefty tax bill on the profits. Marta Iwanek | Toronto Star | Getty ImagesThe Canadian who acquired The One Ring card would most likely pay tax on half their profits. If The One Ring card were sold for 2 million euros — which appears to be the current top bid — then 1 million euros (about CA$1.46 million) would be taxable. Total Canadian tax bill is 'subjective'But what's Canada's tax rate on the profits? (In reality, the effective tax rate would be slightly lower since Canada's income tax system is progressive, as in the U.S., experts said.
Persons: Elijah Wood, Frodo, Misty, Sauron, Mount Doom, , Roger Perzan, Marta Iwanek, Plaskett, Howard Gleckman, it's, Scott Plaskett, John Oakey, Oakey, Sir Ian McKellen, Gandalf Organizations: Coast LLC, Canadian, Toronto Star, Getty, Urban, Brookings Tax Policy Center, Total Canadian, Chartered Professional Accountants Canada, Canada Revenue Agency Locations: Rivendell, Toronto, Canada, U.S, Ontario, Scott Plaskett Toronto
But whether it's time to back up the truck and stock up on cheap dividend payers will depend on a range of factors, including risk appetite and style. Notable constituents include Altria Group, which has an 8.3% dividend yield, and Verizon , which touts a yield exceeding 7%. This would include the Vanguard High Dividend Yield ETF (VYM) , which has a total return of about -1.6% this year, and the WisdomTree U.S. Total Dividend ETF (DTD) , with a total return of 2.5%. VIG, for instance, has a total return of 6% this year, but offers a 30-day SEC yield of 1.82%. Whether it's time to snap up these dividend payers will also depend on your risk appetite and your timeline.
Persons: Johnson, Ryan Jackson, Jackson, VIG, Jordan Benold, Benold Organizations: Exxon Mobil, Johnson, Morningstar, SEC, Altria, Verizon, Vanguard, Microsoft, Apple, Dow Locations: U.S
While pretax 401(k) contributions reduce your adjusted gross income, you'll owe levies on growth upon withdrawal. By comparison, Roth 401(k) deposits won't provide an upfront tax break, but the money can grow tax-free. Experts say these expected changes may also factor into the pretax versus Roth contributions analysis. Plus, recent changes from Secure 2.0 have made Roth 401(k) contributions more appealing for some investors, she said. Consider your 'legacy goals'"Legacy goals" are also a factor when deciding between pretax and Roth contributions, said Lawrence from Mariner Wealth Advisors.
Persons: Roth, , Ashton Lawrence, Lawrence, Lawrence Pon, There's, Catherine Valega, Valega, pretax Organizations: Mariner Wealth Advisors, Lawrence Pon CPA, Pon &, Green Bee, Green Locations: Greenville , South Carolina, Redwood City , California, Boston
"If you focus only on investments, you're going to drive yourself as crazy as the markets are." 'Don't get so wrapped up in the markets'Your broader portfolio consists of all of your assets, said Braxton. In addition to what's invested in the market, those assets might include cash savings, real estate and your human capital. Keep your home and human capital in mind when you strategize your financial plan, she said. Invest in your human capital by refining your skills to preserve your main source of income, especially in economic downturns.
Persons: Lazetta Rainey Braxton, Braxton, what's Organizations: CNBC's, Investors, Invest
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