The #1 way your mutual fund manager is losing you money. Taxes vs. capital gains.

Blue Chip FM

When the 2020 pandemic shut down the economy, investors were still receiving higher and higher dividends. This simple dividend growth strategy can help you stay invested during hard times.

In this episode of Blue Chip Now, hosts Daniel Dusina, CFA® and Matt Mondoux, CFA®, CMT, CFP®, dive into a common client question: why consider individual stocks over mutual funds or ETFs? They discuss the unique advantages of a personalized stock portfolio, specifically the benefits of transparency, cost-effectiveness, and tax efficiency. Daniel and Matt explain how these aspects can provide clients with more control, flexibility, and financial clarity. Join us for an in-depth look at how a carefully crafted stock allocation may better align with personal investment goals and overall financial planning.

Key Points From This Episode:

[00:01:07] Why individual stocks may offer more benefits compared to mutual funds and ETFs.

[00:01:35] Overview of Blue Chip Partners' approach to managing equity portfolios.

[00:02:00] Transparency: Opening statements to see individual stocks in a portfolio.

[00:03:04] Benefits of receiving personalized communications on portfolio changes.

[00:04:12] The appeal of mutual funds and ETFs as "one-size-fits-all" solutions.

[00:05:04] Common investor mistakes: emotional trading and overtrading.

[00:06:03] Concentration risk in mutual funds and ETFs with overlapping assets.

[00:07:18] High concentration of S&P 500 returns driven by a few major tech stocks.

[00:09:02] Cost advantages of individual stocks versus mutual funds with management fees.

[00:10:20] Hidden fees in mutual funds and the transparency challenge for investors.

[00:12:35] When it may make sense to pay for actively managed funds, such as in small-cap or international markets.

[00:14:05] Efficiency: Using tax-loss harvesting with individual stocks for potential tax benefits.

[00:15:45] Potential advantages of harvesting tax losses for future large purchases or gains.

[00:16:30] Importance of an active dialogue with asset managers for personalized tax management.

[00:17:22] Year-end capital gains distributions in mutual funds and their impact on investors.

[00:18:59] Building investment strategies around long-term client needs, including dividend-paying stocks.

[00:20:30] Consistency of dividends as a stabilizing factor during market downturns.

[00:21:45] The critical role of staying invested and not "timing" the market.

[00:22:40] Teaser for future deep dives into client questions and investing strategies.

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