Which funds to use with non-qualified money?

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Oct 4, 2009 1:06 am

For clients that don't want to lock up their money until 59.5 and have lots of non-qualified dollars, what do you reps do to grow their cash?

Oct 4, 2009 2:16 am

Non traded REITs have been a huge part of my business over the years for both qualified and non qualified accounts.  But they're good for non qualified since some of the income is not 1099'd and the yields crush CD rates.  Even though a few of the REITs have had to lower dividends or cut off redemptions, they've still been great. 

Other than that, if your client has "lots" of n/q dollars I'd say some tax free muni funds or bonds would be appropriate.  Maybe use some fee based managers that are tax conscious and will tax harvest if requested.

Oct 13, 2009 11:45 am

I wouldn't say "lots of dollars" I don't think he's in a high enough bracket to put him into a tax free muni bond fund because he's only 31, but he does have $50k of CD money that he doesn't need to use. Any recommendations? Looking a fund with low turnover rates/mostly long term distributions.

Oct 13, 2009 3:55 pm

I like BSV or SHM. You can have other (equity) indexes in your nq wrap to justify your advice and fees. No ticket charge to client.

 
Don't rule out munis just because the tax bracket is low - it still represents an important investment class in terms of potential performance, quality, and so on.
 
Show and tell about the dividends sweeping to cash.
 
http://www.milyunair.com/
Oct 14, 2009 7:38 pm

I have been srprised by the performance of some of Federated's tax-managed funds the past year.

Oct 14, 2009 9:22 pm
AGEMAN:
BioFreeze:

Indexed Annuities.

Yes, let's lock someone up for 15 years in an EIA! Terrible option. Remember, he specifically asked which funds to use with NQ money implying he was looking for something tax efficient. An annuity doesn't fit the bill for this especially an EIA.





Says a guy who can't sell them.. by the way they have 5 year EIAs also..

Oct 15, 2009 12:14 pm
AGEMAN:
chief123:
AGEMAN:
BioFreeze:

Indexed Annuities. 

Yes, let's lock someone up for 15 years in an EIA!  Terrible option.  Remember, he specifically asked which funds to use with NQ money implying he was looking for something tax efficient.  An annuity doesn't fit the bill for this especially an EIA.



Says a guy who can't sell them.. by the way they have 5 year EIAs also..

Yes I know those 5 year EIA's exist, but those aren't the ones those indie insurance agents sell.
Oh let's see should I sell the 5 year product to the 75 year old and get 4% or the 15 year product and get 10%??
By the way we have EIA's at WFA.  Matter of fact they are the 5 year products that we have, but my point is that and EIA isn't the answer to the ?? he was asking since he said the person wanted to grow their money and are obviously concerned about taxes and that would imply that they are concerned about taxes when they pull out the money also!!
 
Wouldn't the money be tied up until he's 59.5? Earnings would get a 10% penalty, wouldn't they?
Oct 16, 2009 8:33 pm
msbroker:
AGEMAN:
chief123:
AGEMAN:
BioFreeze:

Indexed Annuities.

Yes, let's lock someone up for 15 years in an EIA! Terrible option. Remember, he specifically asked which funds to use with NQ money implying he was looking for something tax efficient. An annuity doesn't fit the bill for this especially an EIA.

Says a guy who can't sell them.. by the way they have 5 year EIAs also..

Yes I know those 5 year EIA's exist, but those aren't the ones those indie insurance agents sell.

Oh let's see should I sell the 5 year product to the 75 year old and get 4% or the 15 year product and get 10%??

By the way we have EIA's at WFA. Matter of fact they are the 5 year products that we have, but my point is that and EIA isn't the answer to the ?? he was asking since he said the person wanted to grow their money and are obviously concerned about taxes and that would imply that they are concerned about taxes when they pull out the money also!!


Wouldn't the money be tied up until he's 59.5? Earnings would get a 10% penalty, wouldn't they?





That would make this the worst possible recommendation.

Oct 16, 2009 8:45 pm
ChrisVarick:

I wouldn't say "lots of dollars" I don't think he's in a high enough bracket to put him into a tax free muni bond fund because he's only 31, but he does have $50k of CD money that he doesn't need to use. Any recommendations? Looking a fund with low turnover rates/mostly long term distributions.



If he's not in a high enough tax bracket to benefit from Munis I doubt the money he'll make off a 50k mutual fund buy is going to impact him that much. I'd worry less about the tax implications and more about growing it so he MUST pay taxes on those monies.

Unless that's a major concern of his and if so MUNI and uses the interest to get into the market.

Oct 16, 2009 9:38 pm

Brinker Capital's Destinations has a nice program for non-qualified money.  I don't think Jones guys can sell it thouh...

Oct 16, 2009 10:22 pm
Baldy McGrindy:

the Non-traded REIT's have been one of the best investments I've used in my career.  Great income and stability for portfolios and realistically a double didget total return once the REIT goes full cycle.  I've sold two REIT's that have had liquidity events and both have provided great overall returns to shareholders.  It's also something your wirehouse/EDJ guys can't sell so just another way to differentiate yourself from them.  And they pay quite nice to boot. 


 
BerkshireBull:

Brinker Capital's Destinations has a nice program for non-qualified money.  I don't think Jones guys can sell it thouh...


 
Christ, can Jones guys sell anything that investors would benefit from?
Oct 20, 2009 10:53 pm

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Oct 20, 2009 10:53 pm

Hey moderator can you get this guy to knock it off..