Better Choice and Control

You can’t call a mutual fund manager and say, “Hey, Jim, can you look at maybe selling Uber because it’s down this year, and I could really use help with my taxes?” It doesn’t work that way. With dividend-paying stock portfolios, where you have total control of what you own, you and your advisors can buy and sell when you want. You dictate your taxation. Moreover, upon death, you enjoy something called step-up in basis on your stocks. People like Grandpa Fred, who owned these stocks for many decades and have huge paper gains, essentially eliminate any capital gains treatment if they hold stock until death. The beneficiaries receive a new costs basis of the price of the stock on the date of death. That is what’s called a step-up in basis, meaning your beneficiaries inherit the stock at the current value. If they turned around and sold it the next day, zero taxes would be due. Dividend-paying stocks are one of the most tax-efficient ways to build wealth.