With interest rates on money market accounts and deposit savings at record lows, and yields on many other conservative fixed-income investments not much higher, investors are looking for new strategies.
Qualified dividends from investments held in taxable accounts may be an appealing source of income for investors. These dividends become even more attractive when you consider that they are subject to a maximum tax rate of 15%, at least for the next two years. On the other hand, interest from money market accounts, savings accounts, certificates of deposit, and bonds are taxed at ordinary income rates, which, for most investors, are considerably higher.
Given the temporary status of tax rates, now may be a good time to review your client’s portfolio and consider what allocation changes, if any, could be recommended to better serve their overall investment goals.