Are you a financial planner? They tend to dislike simple plans that ordinary people can understand and use.
The historical fact is that the American stock market has returned roughly 10.5% annually, including reinvested dividends, since the mid-1920s. I use 8% precisely because it is conservative.
Recent returns have been considerably higher, as you have probably noticed.
A Trump Account works much like an IRA. You do not pay taxes each year on dividends, interest, or capital gains earned inside the account. Taxes are deferred until the money is withdrawn, generally as ordinary income. Simple.
The principle is equally simple: put the money in as early as possible, leave it alone, and let time do the work.
If you are satisfied with 3% or 4%, then by all means stay with bonds. Municipal bonds may even provide tax advantages. They are generally safe—until an issuer runs into trouble and defaults. It happens. I have seen it.
But decades of compounded growth with no annual tax bill on the gains is difficult to beat.
You may have missed the section explaining that Trump Accounts are structured much like IRAs. I tried to make that clear.
Bonds do not pay me 8%, neither do CDs, and there is no guarantee whatever that buying stocks will pay that. Why not use a realistic figure of3 or 4% and why will the yearly payments of interest or dividends not be taxed? This is all pretty, but smells like the South end of a North facing male cow.
Gardiner,
Are you a financial planner? They tend to dislike simple plans that ordinary people can understand and use.
The historical fact is that the American stock market has returned roughly 10.5% annually, including reinvested dividends, since the mid-1920s. I use 8% precisely because it is conservative.
Recent returns have been considerably higher, as you have probably noticed.
A Trump Account works much like an IRA. You do not pay taxes each year on dividends, interest, or capital gains earned inside the account. Taxes are deferred until the money is withdrawn, generally as ordinary income. Simple.
The principle is equally simple: put the money in as early as possible, leave it alone, and let time do the work.
If you are satisfied with 3% or 4%, then by all means stay with bonds. Municipal bonds may even provide tax advantages. They are generally safe—until an issuer runs into trouble and defaults. It happens. I have seen it.
But decades of compounded growth with no annual tax bill on the gains is difficult to beat.
You may have missed the section explaining that Trump Accounts are structured much like IRAs. I tried to make that clear.
Jim
Bonds do not pay me 8%, neither do CDs, and there is no guarantee whatever that buying stocks will pay that. Why not use a realistic figure of3 or 4% and why will the yearly payments of interest or dividends not be taxed? This is all pretty, but smells like the South end of a North facing male cow.