Tuesday, March 1, 2011

Net Income; match the investment with the right account

Net income requires you to match the investment with the right account.     Net income is very important to income investors. If you make 12 percent and the government takes 9% in taxes you are only receiving 3%.

Roth IRA's are a great place for income investors to hold their income equity because Roth IRA income is tax free.  Investors who do not use Roth IRA's and who have only taxable accounts need to consider which income investments are best to create the lowest tax bill possible. Municipal bonds are a good choice although care must be taken as many cities and states are in financial difficulty. Master limited partnerships have tax advantages that income investors should learn about. Real estate has the advantage of depreciation pass through which can help to reduce your tax bill from real estate income.

The moral of this rule is to create the lowest tax bill possible on your investment income. Carefully consider which account to hold which investment. Buy your equities in tax free accounts. Buy your municipal bonds, real estate, and master limited partnerships in taxable accounts.

GOOD INCOME INVESTING – cash flow is everything in retirement – THEMONEYMADAM

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