I’ve mentioned before that I haven’t been all that great at setting life goals and financial goals to match them when I was younger. But now that I’m older, I’ve started to develop a bucket list.
After making my bucket list, I’ve started tackling goals. No matter the urgency, I’ve considered fulfilling at least one item each year in order to make my list a pleasure to complete, not a chore.
Some items may not require a lot of cash. Running a marathon, for example, will involve lots of time but minimal expenses — especially if I choose a race within driving distance. But others, like visiting the Arctic, will cost a lot more. Still, I figure if I start planning now, I’ll be much more likely to achieve my dreams.
For those generally pricier items, here are five ways to consider funding a bucket list:
I learned a harsh lesson about portfolio turnover during a recession. I was forced to pay capital gains taxes on distributions of a long-term mutual fund holding, even though I didn’t sell any fund shares and even though the fund value had dropped more than 20% that year.
This experience taught me about portfolio turnover and related expenses, including taxes (along with the generally wise and tax-efficient approach of purchasing mutual funds for tax-advantaged accounts, not taxable ones). Since then, I have paid more attention to this notion, not in fear of turnover but recognition of its potential costs and benefits.
So, what is portfolio turnover and why does turnover matter?