Investment Strategy #13: Earn government-guaranteed interest from tax lien certificates
Many cities and local governments have auctions or sales that permit you to purchase property tax liens. A property tax lien results when a real estate owner – usually a homeowner – doesn’t pay property tax. – If you purchase the lien, you pay the delinquent taxes For this, you receive a certificate entitling you…
Investment Strategy #12: Fully fund your IRA
Virtually all working Americans can contribute up to $2,000 per year to an IRA, while one-income couples can contribute up to $2,250 per year. Money in an IRA compounds, tax-free, until withdrawal. The difference, though, is that your IRA contributions may not be fully tax deductible, as they were before. If you or your spouse…
Investment Strategy #11: Participate in your employer’s 401(k) plan
A 401(k) plan is a retirement plan in which an employee can elect to have the employer contribute part of the employee’s wages to the plan on a pretax basis. These deferred wages are not subject to income tax withholding at the time of deferral. With a 401(k) you can have money “saved” for you…
Investment Strategy #10: For tax-free mutual fund investing, use self-directed annuities
A self-directed or “variable” annuity combines the investment power of no-load mutual funds with tax deferral. Unless you invest in a mutual fund inside a tax-sheltered retirement plan, you’ll owe income tax immediately on every dividend. That’s true even if you reinvest all of your dividends, as most mutual fund investors do. What’s more, if…
Investment Strategy #9: Ginnie Mae funds offer high yields with low risks
Mutual funds are an excellent way to buy Ginnie Maes, which are high-yielding mortgage securities fully backed by the federal government. Securities issued by the Government National Mortgage Assn. (GNMA), a federal agency, are guaranteed, so there’s no risk of default. Yet, Ginnie Maes usually yield anywhere from 0.5% to 2% more than Treasury bonds.…