Today’s blog entry is short and “sweet,” devoted to recent articles from Forbes, RealMoney, and MarketWatch that are worth your time. The Forbes article is called “How To Beat Massive Estate & Income Tax Hikes.” A quote from the article that will suffice to keep this blog current and informative:
“If ever there was a time to do smart estate planning, now is it. If you move quickly you can still shelter millions – even tens of millions – using the right sort of trusts, but if you wait until the law changes and the threshold drops, you’re pretty well sunk, grandpa or no.”
That being said, Jim Cramer at Real Money is unafraid of changes in the capital gain tax. In the linked article he states a couple of his investment rules:
One of my oldest rules, from my days of helping wealthy individuals at Goldman Sachs, is pretty controversial: you must never fear the tax man. I do not care if you have a 44% tax rate or a 20% capital gains rate, if you are driven by concerns about paying that tax more than you care about the fundamentals, you might end up losing a lot more money than you would ever pay the government.
Hence another rule of mine. I never care what your basis is, where you bought it, higher or lower than the current stock price. It means nothing to me. What constitutes a stock that should be sold regardless of the taxman? I think you need to ask yourself if the company you own stock in might be facing an existential crisis. If that’s the case, say, because it is a so-so retailer in a series of so-so malls or because it might be a company with no earnings or prospect of earnings any time soon or because the company’s out of money with no prospects of becoming profitable, then it should be sold whether Biden succeeds in changing the tax code or not.