An intriguing entrant to the robo-advisory arena is Acorns, an SEC Registered Investment Advisor. The idea behind this firm’s approach is to enable investors to “invest the change” (aka “acorns” or relatively small amounts of money) that will build over time into a sizable portfolio.
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?