The best accounts to leave to charity are pre-tax accounts like a Traditional IRA or 401(k). This is because your heirs would pay income tax on withdrawals, but the charity doesn't. Heirs/Charities vs. Uncle Sam Your money can only go three places: You can spend it....
The best accounts to leave to heirs are tax-free accounts (like a Roth IRA) and taxable accounts (non-retirement accounts). This is because your heirs pay no income tax on withdrawals. Heirs/Charities vs. Uncle Sam Your money can only go three places: You can spend...
Open a Roth IRA for your child as soon as she has her first job. Give her decades of tax-free growth, and teach her about money in the process. Why You Should Open A Roth IRA For Your Child Tax-Free Growth A Roth IRA is not taxed while it grows, and withdrawals in...
This post explains how to fund a Roth IRA for your child with cash income that is not reported to the IRS. Background Your child must have earned income that the IRS knows about to contribute to a Roth IRA. It's easiest to open a Roth IRA for your child when they have...
What is Qualified Term? Qualified Term indicates the number of years you could live on your current qualified assets. "Qualified assets" refers to money in retirement accounts. This includes pre-tax accounts like Traditional 401(k)s and IRAs, and tax-free accounts...
What is Business Term? Business Term indicates the number of years you could live on your current business equity. Business equity includes business assets minus related debts. Business Equity / Annual Living Expenses = Business Term Example: If you have a business...
What is Savings Rate? Savings Rate is a key indicator of your financial health. It's the percentage of your annual gross income you're saving. Total Annual Savings / Total Personal Income = Savings Rate Example: Assume your annual gross income is $300K. If you save...
What is Burn Rate? Burn Rate is a key indicator of your financial health. It's the percentage of your annual gross income that goes to living expenses. Annual Living Expenses / Total Personal Income = Burn Rate Example: If you spend $12K/month and your annual gross...
What is Real Estate Term? Real Estate Term indicates the number of years you could live on your current real estate equity. Real estate equity includes homes and investment properties, minus related debts. Real Estate Equity / Annual Living Expenses = Real Estate Term...
What is Total Term? Total Term estimates the number of years you could live on your current net worth. Your net worth is everything you own (investments, house, cash, etc.) minus everything you owe (mortgage, student loans, etc.). Net Worth / Annual Living Expenses =...
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