The Boost: Managing investments for the family

Managing your own investments isn’t easy. When you're also handling investment portfolios for family members, including your partner and children, the process becomes significantly more complex. This week, we delve into the key aspects of effectively handling your family's investments.

🧠 What you need to know

When managing investments for you and your family, you must:

  • Monitor stock performance across different accounts.
  • Ensure appropriate asset allocation in each account, balancing between stocks, ETFs, and sectors like technology and energy.
  • Align investment strategies across accounts, whether focusing on high appreciation or high dividend income.
  • Understand the tax implications of buying and selling stocks, particularly the differences between long-term and short-term holdings and the impact on taxable versus retirement accounts.

Organization is key

Let’s look at a couple of examples to illustrate why organization is so important to building family wealth:

Tax Considerations

Imagine you and your partner file your taxes jointly, like many married couples. If you’re not coordinated in your investment decisions, it can lead to significant tax surprises. For instance, let’s say you profit from an investment in Microsoft but your partner is sitting on a loss in Peloton, different scenarios can arise:

  • Scenario 1: After owning the stock for nine months, you sell your Microsoft shares and realize a significant profit. You now face a substantial tax liability at your personal short-term tax rate, which is your ordinary income tax rate. Your partner is annoyed why you have such a large tax bill after an expensive holiday gift giving season.
  • Scenario 2: Both of you sell your respective shares. The loss from Peloton nearly offsets the gain from Microsoft, resulting in a significantly lower net gain and reduced tax liability.

Organization is key to managing your family's tax obligations effectively.

Retirement Planning

Retirement planning requires careful coordination, especially when different types of accounts are involved. For example, if you have a substantial amount in your IRA and your partner has a lesser amount in a Roth IRA, it's crucial to assess whether your partner's funds are sufficient for their retirement. Withdrawals from an IRA are taxable, unlike those from a Roth IRA. Are you both prepared for these differences?

🤝 How can Mezzi help?

Staying organized is a lot of work! If all of the above feels confusing and intimidating, you’re not alone. Mezzi simplifies navigating these complexities and growing your family's wealth without spending thousands on an expensive financial advisor:

  • See your family’s accounts in one place
  • Make smart tax decisions for your family
  • Evaluate your allocation across taxable and retirement accounts
  • Review your allocation across different assets and sectors

It’s free to get started. Download Mezzi today to organize your family’s investments.