Class C Shares : Asset Location

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Class C shares are fixed percentage that is charged to the investor over a certain period of time then the expenses will drop down after the specified period is fulfilled. After the period of time the cost of the fund will drop to the standard 12b-1 fee. No-Load Funds are funds that carry a fixed expense ratio and don’t have any extra charges that account for commission because they don’t pay any. These funds are typically not sold by brokers and are more commonly used in a fee-only advisory setting. Our firm is a fee-only firm and we have no desire to receive any commissions from the Jack and Jane Wilson. Since we are recommending that they sell everything and put their assets into our capital preservation I portfolio it is important to…show more content…
The Joint brokerage account is different in the fact that it pays taxes on a yearly basis on any dividends, capital gains, and ordinary income. The reason that this is being brought up in the investment portion and not the tax portion is because it is better to put assets that have a high turnover in tax sheltered account and assets that have a low turnover in a brokerage account. The Frost International Equity Fund has a turnover rate of 113% and is in the brokerage account which will generate a lot of taxes. The Vanguard 500 Index Fund which has a turnover of 3% is located in Jack Wilson’s Traditional IRA which is a tax sheltered account. Another major issue is that one doesn’t have to pay federal taxes on most Municipal Bonds but yet Jack has a large portion of these assets in a tax sheltered account. By moving the assets from one account to another Jack and Jane could pay less in taxes and in the long run have a much higher lifetime return. Asset Allocation- Asset allocation is an investment strategy that aims to balance risk and reward by portioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon. Below is Jack and Jane’s current asset allocation. The above portfolio shows the current percentage of where Jack and Jane’s money is located. There is a clear bias to United State stocks over international.
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