UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next
Author: mrsoftware Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Re: Paying the Tax on your Portfolio Date: 4/21/2000 7:41 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Seems to me that many times (certain in my case), most of one's portfolio may come from sources other than 401K or IRA. In such a case, the portfolio is constantly generating taxable income (like dividends). So, the dividends, which are an important piece of the growth of the portfolio, are often used to pay their own taxes. This reduces the growth rate of the portfolio, but 'ya gotta pay the taxes'.

So, once I start drawing my 6% out of the portfolio, this 6% must pay tax on the 6%, plus any tax required on the taxable income generated by the portfolio? Say you take out $100,000 a year from your portfolio. You would pay maybe $25,000 in taxes on the $100,000. Then, maybe your portfolio generates another $50,000 in taxable dividends or other events. In that case, you would pay maybe $20,000 in taxes on that $50,000.

So, you have a total tax bill of $45,000. Suddenly, your $100,000 is now $55,000. I can really see that I would want the portfolio to pay its own taxes (the tax on the extra $50,000).

It seems that this is a common enough question that some analyst would have already included some treatment of taxes in building the set of tables used to determine the 'safe' withdrawl amount. Maybe I can do that if I eventually learn enough about this stuff.

Don
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement