Gilbert Wealth Articles

Annualized Return versus Cumulative Return Explained

When evaluating the performance of an investment, two common metrics often come into play: annualized return and cumulative return. Understanding the differences between these metrics is crucial for accurately interpreting your investment's growth over time and comparing it to other opportunities.What Is Cumulative Return?Cumulative return measures the total percentage change in the value of an investment over a specific period. It represents the overall growth of the investment without considering how long it took to achieve that growth.Formula:Cumulative Return = (Ending Value−Beginning Value) / Beginning ValueExample:If you invest $10,000 and its value grows to $15,000 after five years, the cumulative return is:$15,000−$10,000 =…
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The Differences Between Short-Term and Long-Term Capital Gains

Capital gains occur when you sell an asset for more than its purchase price. The distinction between short-term and long-term capital gains is important for tax purposes, as each is treated differently under U.S. tax law. Short-Term Capital GainsShort-Term Capital Gains are gains from the sale of assets held for one year (365 days) or less are considered short-term.These gains are taxed as ordinary income, meaning the tax rate depends on your marginal tax bracket which is the highest tax rate applicable to you.  Currently, ordinary income rates range from 10% to 37%. For the latest rates, see Latest Ordinary Income…
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Understanding Estimated Capital Gains Distributions

Understanding Estimated Capital Gains Distributions Capital gains distributions are a critical aspect of mutual fund and exchange-traded fund (ETF) investing. They represent the profits a fund makes when selling securities that have appreciated in value. While distributions are a normal part of investing, understanding them and their timing can help investors manage their tax liability and align their portfolios with their goals. How Are Capital Gains Distributions Generated? Capital gains distributions occur when a mutual fund or ETF sells investments within its portfolio for a profit. These gains are classified as either: Short-term capital gains: Generated from securities held for…
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How to Access Student Loan Information

Managing student loans can feel overwhelming, especially when trying to track your progress toward forgiveness programs like Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) forgiveness. This guide provides basic instructions and detailed steps to understand your loans, determine your status toward forgiveness, and maximize your repayment options.Basic Instructions for Managing Student LoansIdentify Your Loan TypesLog in to studentaid.gov using your FSA ID and password.Navigate to the “View My Aid” section to see:Loan types (e.g., Direct Subsidized, Direct Unsubsidized, PLUS, Perkins, FFEL).Loan balances and interest rates.Servicer information.Why This Matters: Loan types determine your eligibility for PSLF, IDR, and other…
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Navigating Finances After Death: A Guide to Handling Common Expenses and Accessing Funds

Dealing with finances after the loss of a loved one can feel overwhelming. Most estates take six to nine months to be fully settled, and some more complex estates can take even longer. A common question I receive is how to manage the immediate expenses like funeral costs, final medical bills, utilities, and ongoing obligations such as mortgages and credit card payments. This guide outlines the most common ways to handle these financial matters after a death, who is able to do what, and how quickly funds may be accessed to cover necessary expenses.Who This is For: Generally, if you are a surviving spouse,…
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Understanding MYGAs: Multi-Year Guaranteed Annuities

A Multi-Year Guaranteed Annuity (MYGA) is a type of fixed annuity that provides a guaranteed interest rate for a specified number of years. Similar to a Certificate of Deposit (CD), MYGAs are offered by insurance companies and are designed to provide a safe, predictable return on investment over the annuity's term, which can range from two to ten years. MYGAs are particularly attractive for individuals looking for a low-risk option to preserve their principal while earning a steady interest rate.How Does a MYGA Work?When you purchase a MYGA, you agree to invest a lump sum with an insurance company. In…
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What Are Required Minimum Distributions or RMD’s?

Required Minimum Distributions (RMDs) can feel like a complex and imposing topic, but they play an essential role in retirement planning. The rules surrounding RMDs are important for anyone with a tax-deferred retirement account, as understanding them can help you manage your income, reduce tax burdens, and ensure compliance with IRS regulations. This guide will help clarify what RMDs are, why they matter, and how you can navigate them effectively. What are Required Minimum Distributions (RMDs) RMDs are the minimum amounts that you must withdraw annually from your tax-deferred retirement accounts once you reach a certain age. These accounts include Traditional…
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How to Use Funds in a 529 for Education

You've been diligently saving to a 529 for years and now the big day has arrived. Your child is ready to use that 529 money for college! Or.. some other qualified education expense. How do you actually do that?There are several methods that you can implement to use 529 funds. Each method of accessing the funds offers unique advantages and challenges, making it essential to align your approach with IRS guidelines. This article explores various ways to use 529 funds, provides best practices, and offers tips for staying compliant.See 10 Ways a 529 Can Be Used – Gilbert Wealth for a summary…
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Using a 529 for Off-Campus Living Expenses

Using 529 plans for off-campus living expenses can be tricky. While 529 funds can be used for room and board, there are strict guidelines to ensure compliance with IRS rules. Misuse of funds, even unintentionally, may result in income tax and penalties on non-qualified withdrawals. This article explores key considerations when using 529 funds for off-campus living and other common but questionable expenses.Room and Board for Off-Campus LivingIf the student lives off-campus, room and board are considered qualified expenses up to the school’s official cost of attendance (COA) for housing and meals. The COA acts as the upper limit on…
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Major Time Milestones in Roth Conversion Planning

Roth conversion planning involves strategic timing to maximize tax efficiency and financial benefits. Several key age-related milestones directly affect the optimal timing and impact of Roth conversions. Below is an in-depth overview of each milestone, including both required dates and opportunities for enhancing long-term financial outcomes. Age 59 ½: Penalty-Free Withdrawals from Retirement AccountsAt age 59 ½, individuals gain the ability to withdraw from traditional IRAs and 401(k)s without incurring the 10% early withdrawal penalty. This milestone is crucial for Roth conversions since it allows pre-retirees to convert part of their tax-deferred accounts into Roth IRAs without worrying about withdrawal…
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