Five Easy Pieces of Investment Advice

Here are Five Easy Pieces of Investment Advice that can s-t-r-e-t-c--h your investment dollars. The first 3 “Pieces of Advice” are connected. It's a good practice to verify if your broker or advisor is following these tips or not (I’m always amazed to see how many money managers disregard these commonsense ideas and cost their clients more money!):

  1. Location, Location, Location

Different types of investments fit better in taxable accounts (funded with after-tax money) vs.  tax-deferred accounts (e.g. IRAs, 401ks) vs. accounts that never will be taxed (Roth IRAs or Roth 401ks). While one investor may have most of her money in tax-deferred accounts (which can hold any type of investment), another investor may have most of his money in taxable accounts so HE needs to be more tax-aware:

a) taxable accounts: invest more of this money in stocks (individual shares, stock mutual funds or Exchange Traded Funds). Exchange Traded Funds (ETFs) are attractive in taxable accounts since they generate fewer capital gains. All types of stock holdings flourish in taxable accounts because gains are taxed at lower capital gains rates if sold after being held at least one year (and realized losses can offset gains).  Real Estate Investment Trusts make tax-unfriendly distributions so these are best held in tax-deferred accounts.  Regular taxable bonds are not a good fit in taxable accounts – go with municipal bonds and municipal bond funds because they’re exempt from federal taxation.

Sign Up for E-News

b) tax-deferred accounts: invest more of this money in traditional bonds, Real Estate Investment Trusts and commodities. If most or all of your investments are tax-deferred, then invest in a mix of stocks and bonds to make sure you are well-diversified.

c) Roth IRAs and Roth 401ks: these are ideal vehicles to hold stock investments since holdings grow tax-free forever.

2.  Tax-Managed and Tax-Advantaged Mutual Funds

Why invest in mutual funds instead of individual shares? Because they do a great job mitigating risk by investing in a large number of holdings. This valuable diversification – the investment equivalent of a “free lunch” is powerful. One drawback in taxable accounts is taxable capital gains distributions that mutual funds pass on to investors. You pay the capital gains tax – not the mutual fund – and there can be gains even if the mutual fund has declined in price over the past year. A better way is to invest in taxable accounts is to invest in tax-managed or tax-advantaged mutual funds. For example, Vanguard offers a “Balanced Tax-Managed Balanced Fund” designed for taxable accounts. Some other mutual fund companies offer tax-managed funds (note: I use  Dimensional Fund Advisors funds, which provide a full suite of tax-managed mutual funds). If you don’t have access to tax-managed or tax-advantaged funds, investing in Exchange Traded Funds (ETFs) may trigger lower taxes than comparable mutual funds.

3. Low Cost Mutual Funds and Passive (= Low Cost) Exchange Traded Funds

In the great “passive” vs. “active” mutual funds debate, passive continue to attract more money from investors because they see the benefits of the low underlying expense ratios (note: data also show it’s hard to “do better than the market” on a consistent basis). Vanguard typifies this approach, charging rock bottom fees on the order of 1/10 of 1% vs. actively managed A, B and C share mutual funds that generate commissions for your broker and can cost you 25x or more per year (2.5% per year, including broker commission). Passive Exchange Traded Funds also can sport very low underlying expense ratios.

If you use these three strategies (Location, Tax-Management and Low Fees), you’ll stretch your investment dollars significantly.

In addition, here are 2 other strategies for stretching your money when helping your children with college or savings:

4. 529 Plans

If your child is headed to college, invest in a “direct” (no advisor needed) 529 Plan. I send a lot of my clients to the State of Utah 529 Plan ( Another good plan is the NY Direct 529 Plan ( If you and/or your spouse work in NY (and you live outside NY State), you may benefit from deducting NY taxes from a portion of your contribution .

5. Helping Your Children Get a Leg Up on Investments

If your teenage or adult child has W-2 earned income, he/she should open a Roth IRA account and fund it each year. If he or she can’t afford to fund it, parents can step in and cover some or all of funding to help their children get a leg up on investing. You can defer up to $5,500 per year in a Roth IRA or match the amount of W-2 income if less was earned.  Right now Roth IRA accounts remain tax-free and are a fantastic savings vehicle for young people.

Put these “Five Easy Pieces” together and you’ll get more far more out of your investment dollars.



Eve Kaplan is a Fee-Only (no products sold) Certified Financial Planner® Practitioner with 30+ years of investment/planning experience. Kaplan Financial Advisors upholds the highest fiduciary standards in the planning industry.  Eve opened Kaplan Financial Advisors in 2004 to provide comprehensive financial planning and investment management services to single women and couples. Eve can be reached at 908-898-0549 or  Visit her website at


Copyright © 2011-2017 by Eve Kaplan

The opinions expressed herein are the writer's alone, and do not reflect the opinions of or anyone who works for is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Berkeley Heights

Berkeley Heights’ Women of the Week (WoW) Series features Beth Ferris Sale

March 18, 2018

In honor of the women who are driving change, blazing trails and nurturing society, the Berkeley Heights Diversity Council is pleased to announce an exciting initiative called, Women of the Week (WoW) Series. In the spirit of community, we wanted to honor the women right here in Berkeley Heights who are impacting the world in their own way for the remaining weeks of Women’s History ...

Register for Breakfast with the Easter Bunny at Mt. Carmel Hall in Berkeley Heights

March 19, 2018

BERKELEY HEIGHTS, NJ - Come out and enjoy Breakfast Buffet with the Easter Bunny on Sunday, March 25 from 8 a.m. to 1 p.m. at Mt. Carmel Hall at 56 River Road in Berkeley Heights.

Children can have their picture taken with the Easter Bunny and receive a special gift from the Easter Bunny.

The buffet includes all you can eat pancakes, eggs, bacon, sausage, donuts, muffins, coffee, ...

OLP Presents 'Screenagers' a Documentary on Growning Up in the Digital Age

Our Lady of Peace Church and Academy in New Providence will be hosting a special screening of the movie "Screenagers" regarding a very important topic for families and youth – “Growing up in the Digital Age.” The movie delves into the important and current topic of children and teenagers and their use of social media and digital devices. The movie is appropriate for ...

Transform Your Relationship with Food


You will receive on-going support, personalized information, realistic and individualized goals that allow for lasting lifestyle changes, amazing recipes, motivation, sample grocery lists, meal planning assistance, advice on avoiding fad diets, objective feedback and tools to avoid lifestyle diseases.

• Healthy eating Healthy ...

NPHS Student's Response to After School Walk-out Plan at NPHS

March 14, 2018

A group of students file into a science classroom amid a nervous din of chatter, the air is electric with excitement and nervousness. This small group of approximately 30 students are a studious bunch, largely members of the sophomore class with squeaky clean administrative histories. They are currently preparing to defy authority and stand up for what they believe in, even though they had been ...

New Providence's Allen W. Roberts School Gets Security Walk Through by Police Department after Bomb Threat

March 12, 2018

NEW PROVIDENCE, NJ - The New Providence Police Department sent a letter to parents and guardians of students at Allen W. Roberts Elementary School after a non-specific bomb threat was reported on Monday afternoon.

It's the second threat  reported at a New Providence school in March. The first threat was reported on March 5th at New Providence High School.

Emergency ...

Avon Loses Its Last ‘Grand’ Hotel to the Claw of an Excavator

March 17, 2018

AVON-BY-THE-SEA, NJ — In less than two days, an Avon-by-the-Sea landmark that stood for 130 years was reduced to a huge pile of rubble. The Norwood Inn no longer stands on the corner of Norwood and Second Avenues — the last of the stately hotels that once graced the streets of Avon.

As onlookers gathered around the demolition site on March 15 and March 16, an excavator clawed its ...

Upcoming Events

Mon, March 19, 7:00 PM

Cranford Community Center, Cranford

Agents of Change: Women in NJ History



Mon, March 19, 7:30 PM

Columbia Middle School Multi-purpose Room, Berkeley Heights

Berkeley Heights Board of Education: Monday's ...


Tue, March 20, 7:30 PM

Mountain Park School, Berkeley Heights

Boy Scout Open House - Troop 368

Education Giving Back

Wed, March 21, 7:00 PM

Summit Free Public Library, Summit

increase your networking and interviewing iq

Business & Finance Other

Thu, March 22, 7:00 PM

Summit Free Public Library, Summit

The Long march home: An American Soldier's Life ...

Education Other

JCP&L Representative Describes Utility’s Actions During Storm Quinn, Answers Residents' Questions

BERKELEY HEIGHTS, NJ – The format of this week’s  Berkeley Heights 'Here and Now' was turned on its head this week. Mayor Bob Woodruff reviewed what happened in the township following Storm Quinn and its predecessor Storm Riley, complete with statistics. He then asked a representative of JCP&L questions about the utility’s response, and how it was ...

Berkeley Heights, Here and Now: Redevelopment Updates

BERKELEY HEIGHTS, NJ - The Mayor's Round Table has been rebranded to "Berkeley Heights, Here and Now." This new format will continue to provide updates from Mayor Bob Woodruff, municipal offices and the Communications Committee want to hear from citizens, businesses and community organizations.

Included in this episode, Mayor Bob Woodruff addresses the status of the ...

You Want a Check for How Much!

 My first admissions gig was working for a small liberal arts college with a pretty hefty price tag.  Picture me at a college fair: name tag in place, pile of brochures ready to go.  An eager family would walk up and we’d start a conversation.  One of the first questions I’d get from parents was about cost and the moment that $50,000-plus figure left my mouth I ...

Now That The Dust Has Settled…Smart Tax Moves In 2018

Now that the dust has settled, here are some smart tax moves to lower your taxes and/or avoid higher taxes/penalties in 2018. These steps may be especially helpful if you live in high property and high income tax states (e.g. New Jersey, New York, California) since state and local tax deductions are capped.  Unfortunately all these changes mean you’ll need more time and energy to ...