Tax-Efficient Investing: Optimizing Asset Location with Higher-Yielding Assets

Part 1 of 2
We speak with Christine Benz, Morningstar's personal finance guru, about the significant impact of higher yields on retirement planning. Benz discusses the potential benefits of adding a basic fixed immediate annuity to retirement plans, the importance of asset location for higher-yielding assets, and the advantages of investing in defined maturity bond funds. She also shares insights on the iShares I bond Term TIPS ETFs and the implications of higher interest rates on portfolio returns. Don't miss this informative discussion on optimizing your retirement strategy.
WEALTHTRACK Episode 2023 originally broadcast on February 02, 2024
More Info: wealthtrack.com/the-huge-impa...
Get: Safe Retirement Withdrawal Strategies: www.morningstar.com/lp/the-st...

[@randommuser3391]

Thanks team for your sage wisdom, Perfect timing for me!

[@WhiteCloud746]

Christine Benz is always a great guest.

[@BB-cs3kk]

A true gem and advocate for investors. She did an amazing job with bogleheads’ conference available on KZbin. Thank you for hosting C. Benz.

[@vanguardvaluist2614]

Always appreciate hearing Christine’s thoughts. Thanks for having her on! Would also love to see Michael Kitces on discussing asset allocation, withdrawal rates, effects of being flexible and ratcheting strategies during/approaching retirement years.

[@steveagnew3385]

Thanks Consuela and great job Christine. Am 2 years into retirement and only need limited fixed income at 5% return. We are 92% in equities that returned 30% in 2023 and this year should also be good. Keep emphasizing that there are many ways to make retirement work...

[@chessdad182]

Helpful information.

[@joannemeeks745]

Another excellent interview. I would add that there is no substitute for budgeting, and that needs to tighten up in our 50's and 60's. Most retired people I see right now spend way too much money. We under estimate the chances of running out of money in our 80's.

[@hightide4782]

Great interview. It’s always interesting and fruitful to listen to Christine Benz. Thanks.

[@Jl-620]

I am curious about these iShare iBonds ETFs, as after all they still hold bonds with their prices changing with interest rates, and investors will buy the ETF at different times throughout the life of the ETF. Since these are so new, does anyone have experience or is there any historical data showing that the principal invested in these ETFs was indeed returned in full when they reached their maturity and were liquidated?

[@4tomop]

Another really good session. Where is Part 2? Could you add a link in the info for this video? Thank you!

[@freedomlife3623]

Why does US insurer don’t have insurance for annuity? In Canada, we have up to $5000/month per insure guaranteed just like GIC has.

[@knighteffsix6351]

Annuities are guaranteed by the individual states in the U.S. They are usually guaranteed up to about $250,000.

[@AN-OLD-BEE]

Hello Ms. Benz. I hope this e-message finds you well. What do you think of the following plan? I have finalized my decision to invest in an IRA with three ETFs that have received a Gold rating from Morningstar. The first recommended ETF, SCHD, comes with a 33% allocation and has an expense ratio (ER) of 0.06%. The second recommended ETF, QQQM, also comes with a 33% allocation and has an ER of 0.15%. The third recommended ETF, VT, comes with a 34% allocation and has an ER of 0.07%.

[@danielw4394]

If morning stars research studies changes the safe withdrawal from 3.3% in 2022 to over 4% next year, a 25% change, I would really question the validity of the research, accuracy of data, duration of data… How can any potential retirement take comfort in the study

[@jerryware1970]

Yields are higher…more income replaces the withdrawal

[@danielw4394]

@@jerryware1970 Yes yield are higher….. … But a study should be extensive, should not be super sensitive to one event …it totally makes no sense… Wonders if the study went thru peers’ preview

[@danielw4394]

@@jerryware1970 So….. another dip and the safe withdrawal rate changes ? So how does one make sense of such pinning withdrawals rate? Somehow a study should be extensive, comprehensive and consistent, and not Super sensitive to single event . So either the previous study is erroneous or current is when compared to 1997 paper. Doesn’t an hyper inflation in a single year changes the whole paradigm then, when the net average just move a decimal ? I hope both papers went thru external peer reviews before publishing.

[@george6977]

When interest rates were near zero so were bond yields, which took the safe withdrawal rate down.

[@danielw4394]

@@george6977 So if interest rate falling in near future, the withdrawal rate also decreases ? So how does one take comfort in a moving target? Increase in rate also imply in inflation. . I don’t really get it.

[@chrisbentley71]

There is NEVER a benefit of an annuity unless you are the salesperson or insurance company.

[@rokyericksonroks]

She is describing a “very nice bump up” (15:33) to almost 9% guaranteed for the annuitant’s lifetime. $750/ month on a $100K policy.

[@freedomlife3623]

To each of your own, just purchased some annuity with 9% payout rate, along with my pension and CPP+OAS( I am in Canada) will cover all my daily expenses. So anything generated from my RRSP & TFSA are for my traveling and donations. Just in case I loss my marble, I should still have enough to live on.

[@georgesontag2192]

If you buy a $100,000 anunity, and you pass away much sooner than expected, you basically just gave away $100,000. No thanks for that deal.

[@pensacola321]

Not true, Cletus. Do some homework.

[@edwardhayes6111]

Cash return rider could provide that your beneficiaries get paid.

[@freedomlife3623]

You are showing your ignorance, you can get death payout & payout guaranteed rider on annuity. Why such an absolute response?

[@knighteffsix6351]

You can also buy a 20 year certain annuity. Check it out.

[@jamesmorris913]

What I'd like to see, is an end to these IDIOTIC R.M.D.s!! But..not for everyone..they should only apply to people who are 75 or older, AND; those who have a total NET-WORTH, including their primary residence (not INCOME) of $1,000,000 or greater. And, adjust that $1,000,000 figure annually for inflation.

[@freedomlife3623]

Just mean you haven’t done your retirement tax planning properly.

[@i-postm4943]

It's idiotic to think that someone who put $ into a tax deferred retirement plan wouldn't understand that they eventually have to pay the tax. It's tax deferred - not tax forgiven.

[@rickdunn3883]

@WEALTHTRACK. you produce excellent videos. People like Christine are really spot on with great advice. Of course, her recommendations are best understood by moderately sophisticated investors. Nice work!