How to Invest More Outside of Retirement Accounts, 529 Strategies, & Dividend Growth - Money Q&A

Summary

Podcast Summary: The Personal Finance Podcast - "How to Invest More Outside of Retirement Accounts, 529 Strategies, & Dividend Growth - Money Q&A"

Host: Andrew Giancola
Release Date: November 20, 2024

Andrew Giancola, founder of Master Money Co., delves into a comprehensive Money Q&A session in this episode of The Personal Finance Podcast. Addressing listener questions, Andrew provides actionable insights on diversifying investments beyond traditional retirement accounts, optimizing 529 plans, selecting suitable accounting software for small businesses, and understanding the tax implications of dividend investing. Below is a detailed breakdown of the key discussions and takeaways from the episode.

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1. Investing Beyond Retirement Accounts

Question:
A listener approaching 40 has maximized their 401(k) and Roth IRA contributions and seeks strategies to invest more aggressively outside these accounts.

Andrew’s Response:
Andrew outlines a strategic approach to expanding investment portfolios beyond retirement accounts:

• Taxable Brokerage Accounts:
  “The next place I go typically is I go to my taxable brokerage account. Now this is for a number of different reasons. Number one is my taxable brokerage account is going to give me liquidity.” (04:15)

  • Liquidity: Essential for emergencies and seizing investment opportunities.
  • Flexibility: Allows for early retirement options without being locked into retirement account restrictions.
  • Tax Efficiency: Long-term capital gains tax rates (~15%) are generally lower than ordinary income taxes.

  Andrew recommends investing in low-cost ETFs such as VOO and VTI to ensure diversified and cost-effective growth.

• Buying Businesses:
  “I like purchasing businesses. I enjoy the process. And it is something where I like to buy them and then grow them.” (08:30)

  • Entrepreneurial Ventures: Ideal for those with the time and flexibility to manage and grow businesses.
  • Options Include: Purchasing small businesses, franchising (e.g., multiple Jersey Mike’s locations), and other entrepreneurial endeavors.

• Real Estate:
  “Real estate is a fantastic wealth building vehicle. You can do it and have a full time job.” (11:05)

  • Passive Real Estate Investments: For those who prefer not to handle tenant management directly, platforms like Fundrise offer accessible entry points.
  • Active Real Estate Investing: Owning rental properties can be lucrative, even for individuals with full-time jobs, as demonstrated by a case of a police officer managing 82 rental properties.

Andrew emphasizes the importance of running accurate numbers using tools like rental property calculators to ensure profitable real estate investments.

• Additional Avenues:
  • Diversified Bonds: For lower-growth, more stable investments.
  • Health Savings Accounts (HSAs): Beneficial for those with high-deductible health plans.
  • Savings Rate Increase: Allocating higher savings towards diversified investments.

Crypto Considerations:
Andrew advises minimal exposure to cryptocurrencies, suggesting that if included, it should be a small percentage (e.g., 5%) of the portfolio, focusing primarily on stable options like Bitcoin or Ethereum.

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2. Optimizing 529 Plans for Education

Question:
A listener sought clarification on using 529 plan funds for studying abroad, expressing confusion over eligibility of expenses.

Andrew’s Clarification:
“You can actually transfer unused funds from a 529 plan to yourself and use them for qualified education expenses. So this includes studying abroad as long as the institution you plan to attend is eligible.” (22:10)

• Qualified Expenses:

  • Includes: Tuition, fees, books, supplies, equipment required for enrollment, computers, internet access, and room and board (if enrolled at least half-time).
  • Study Abroad: Permissible if the foreign institution is eligible for federal student aid programs.

• Non-Qualified Expenses:

  • Excludes transportation, travel-related costs, health insurance, lodging outside approved room and board, and entertainment.

Andrew explains that by transferring the 529 plan beneficiary to oneself or another qualifying family member, funds can be utilized creatively for educational purposes abroad without incurring penalties, provided expenses remain qualified.

“Qualified expenses include tuitions and fees, books, supplies and equipment required for enrollment, computers, Internet access and related software, room and board…” (23:45)

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3. Selecting Accounting Software for Small Businesses

Question:
A listener transitioning from QuickBooks Desktop to Online seeks recommendations for alternative accounting software suitable for a simple retail service business.

Andrew’s Recommendations:
Andrew evaluates several accounting software options based on affordability, ease of use, and integration capabilities:

• Wave Accounting:
  “Wave is only cloud-based accounting software that offers definitely a simple interface. It is actually free to use and it has paid add-ons like payroll.” (29:30)

  • Pros: Free basic services, user-friendly.
  • Cons: Limited features, no inventory management.

• Zoho Books:
  “Zoho Books is part of the Zoho suite of business apps. It does support bank integration, expense tracking and user-friendly interface with POS integration.” (31:00)

  • Pros: Affordable ($15/month), integrates well with other Zoho apps.
  • Cons: Limited advanced features compared to QuickBooks.

• Xero:
  “Xero is one that I know a lot of people love. It is also cloud-based and it has really great features that I know people love.” (32:45)

  • Pros: Comprehensive features, strong integration options.
  • Cons: Moderate cost.

• Manager IO:
  “Manager IO is a great one and it is simple to use, but it's about $39 bucks a month.” (34:10)

  • Pros: Desktop version available, suitable for those preferring non-cloud solutions.
  • Cons: Higher cost.

• FreshBooks:
  “FreshBooks is more user-friendly than QuickBooks by far, but it has less in-depth functionality for complex accounting.” (35:30)

  • Pros: Intuitive interface, ideal for small businesses prioritizing simplicity.
  • Cons: Limited for complex accounting needs.

Andrew concludes by advising listeners to choose software that aligns with their business complexity and to consider leveraging platforms like Upwork for affordable accounting assistance.

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4. Tax Implications for Dividend Investors

Question:
A new investor specializing in dividend growth seeks understanding of stock price behavior around ex-dividend dates and the tax implications of dividend income in taxable brokerage accounts versus retirement accounts.

Andrew’s Explanation:

• Ex-Dividend Date Impact on Stock Prices:
  “On the ex dividend date, the stock price typically drops by the amount of the dividend.” (39:20)

  • Mechanism: The stock’s value adjusts downward by the dividend amount as the company's equity decreases post-dividend payout.
  • Total Return Consideration: While stock price may drop, the dividend received compensates for the decline, maintaining overall investment return.

• Dividend Types and Taxation:

  • Qualified Dividends:
    “Qualified dividends are taxed at a more favorable long-term capital gains rate. So 0%, 15%, or 20% depending on your income level.” (41:10)

    • Best For: Taxable brokerage accounts to leverage lower tax rates.
    • Requirements: Must originate from US or qualified foreign companies and held for a specific duration around the ex-dividend date.

  • Non-Qualified (Ordinary) Dividends:
    “Non qualified dividends are taxed at your ordinary income tax rate, which could be higher depending on your tax bracket.” (43:00)

    • Best For: Retirement accounts like Roth IRAs where dividends can grow tax-free.

• Schedule K1 Considerations:
  “I would try to avoid investing in Schedule K1s as they add complexity to your tax return.” (45:30)

  • Explanation: Schedule K1s are issued for partnerships and can complicate tax filings due to additional reporting requirements.
  • Recommendation: Prefer investments that do not require Schedule K1s to streamline tax processes.

Andrew emphasizes strategic placement of different dividend types within appropriate accounts to optimize tax efficiency and simplify tax reporting.

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5. Recommended Reading

Andrew recommends "The Single Best Investment" by Lowell Miller as an excellent resource for dividend growth investors. He praises the book for its motivational impact and comprehensive insights into dividend investing strategies.

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Conclusion

In this episode, Andrew Giancola provides listeners with valuable strategies to enhance their investment portfolios beyond traditional retirement accounts, optimize educational savings through 529 plans, select cost-effective and efficient accounting software for small businesses, and navigate the complexities of dividend taxation. His practical advice empowers listeners to make informed financial decisions, paving the way for sustained wealth growth and financial independence.

“Congratulations on maxing these out. That is absolutely amazing that you are doing that. That means you are really accelerating your path to wealth.” (13:45)

Stay Connected:
For more personalized advice and resources, listeners are encouraged to join the Master Money newsletter at MasterMoneyCo/newsletter and follow the podcast on platforms like Spotify, Apple Podcasts, or YouTube. Sharing these insights with friends and family can further enhance collective financial well-being.

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Note: Timestamps are approximate and correspond to the segments where key points and quotes occur within the transcript.

Transcript

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This episode of Money Q and A How to Invest More Outside of retirement accounts 529 strategies and dividend Growth.

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What's up everybody and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of Master Money Co, and today on the Personal Finance Podcast, we're going to be diving into another episode of Money Q and A answering your questions. If you guys have any questions, make sure you join the Master Money newsletter by going to Master Money Co slash newsletter and you can respond to any of our newsletter issues that come out every single week and you may get your question answered on the show and don't forget to follow us on Spotify, Apple Podcasts, YouTube or whatever podcast player you love listening to this podcast on. And if you're getting value out of the show, share with a family member or friend and consider leaving a five star rating and review on Apple Podcasts, Spotify or your favorite podcast player. Now today we're going to be diving into four of your questions on this money Q and A. And the first one is going to be how to invest more outside of retirement accounts. This person is maxing out their retirement accounts and they want to talk about how to invest more, which we will get into using the 529 plan for studying above. Broad is going to be the second question. The best accounting software for small business is the third one. And then lastly, how do dividend investors pay taxes? So this is going to be one where we are going to be talking through a bunch of different subjects. So if that's something you're into, let's get into it. All right, so question number one is I am approaching 40 and I have done very well with traditional 401k Roth IRA route to retirement. I have done very little investing outside of that and I'm wanting to get more aggressive in the that aspect of wealth building. So this is an awesome question because I'm going to go through some of your options that you have available and I actually am going to go through maybe in the order of operations that I am personally doing it. And the reason why I'm doing that is just to kind of give you the argument of exactly how I think about this process. So here's how I do it is outside of those retirement accounts, the next place I go typically is I go to my taxable brokerage account. Now this is for a number of different reasons. Number one is my taxable brokerage account is going to give me liquidity. Liquidity is incredibly important when it comes to wealth building. If you don't know what liquidity is, it's basically how fast you can liquidate your money in order to turn it into cash. Okay, that's the simplest way to explain this. And the speed at which you can get to liquidity is very, very important on your wealth building journey. And this can be for a number of different reasons. Number one is you want to get there really quickly in case an emergency happens in life outside of your emergency fund, maybe some big giant emergency happens. And you want to make sure that you can get to liqu cash in case your emergency fund is not large enough. That's number one. Number two though is liquidity helps you have the ability to take advantage of opportunities that come up. So one example of this is we had an opportunity come up to buy a certain business over the course of the last couple of years and I save cash on hand, typically on the side for buying businesses. But if you don't have enough and you have the ability to liquidate a part of maybe one of your brokerage accounts or something like that, then having that liquidity available to take advantage of opportunity is very, very important. And then number three is you can also earmark some of this cash for liquidity to be able to go out there. And maybe you want to buy a business, maybe you want to buy real estate, those types of things. And so if you have a longer term play, that is another thing that you can do with these accounts. So I put money into the taxable brokerage account first, A for that liquidity, B, for flexibility. So when I start to reach retirement age, I want to have some additional flexibility. I will have the ability to retire. You know, if I want to retire, I can go ahead and retire early. And I want to have that flexibility to have some money not locked into retirement accounts. Now the tax that you pay inside of a brokerage account as long as you have long term capital gains taxes is going to be significantly lower than what you would pay on income tax. Usually around for most of you, it'd be around 15%. And so because of that, it's only on the gains of your money as long as you hold those investments for one year or longer. So number two is I just want to have that flexibility in retirement. That's a huge, huge deal to me is to have liquidity and to have flexibility. That's going to give you options. So I like to bridge into a taxable brokerage account and invest those dollars into low cost ETFs typically is where I put those dollars. So I like voo, I like vti, all of those are great. And there's some great other ETFs out there. We will have an episode actually coming out soon where we're going to be talking about some of our favorite index funds and ETFs upcoming for next year. It doesn't change a lot for me usually, but it's very simple the way I invest. But we will go through some of my top favorite ones coming up on a future episode. So make sure you're subs if you're not, if you want to hear that episode. So taxable brokerage account is where it kind of all starts, because you can funnel cash in there. If an opportunity comes up, I can use that cash, A, to take advantage of some of these other opportunities I'm going to talk about, and then B, if not, then I leave it in there for retirement. And it's investing and growing and outpacing inflation and all those fun things that we talk about all the time and reasons why we want to invest. Now, number two is the second bookmark. ARM used to be real estate investing. It used to actually be real estate investing, but now it is actually buying businesses. So right now, at the point in time that I am in life, I see more opportunity for me personally to invest in businesses while I still have energy and I'm driven and there's a lot of things that I want to do. So I like purchasing businesses. I enjoy the process. And it is something where I like to buy them and then grow them. And it is something I have the skill set that I've developed over time to do that may not be for everyone, but for me, my second option is going to be buying businesses. So originally the way I learned this process was through reading books and kind of ignited the fire and the spark to learn more. So buy them build is a great starting point and you can start to read a bunch of different things coming out. But outside of that, you can invest in a buying small businesses. You know, there's different areas that you can look at from laundromats all the way up to buying physical businesses to, you know, you could buy a florist, you could, but there's all kinds of stuff out that you could buy. Another option there is if you're interested in franchising. Now, franchising I am less interested in only because I think that you have to own a couple of different franchises to make some real, real cash. But for some people, franchising is a better route because it's a business done for you in a box that can help you through the process. And if you have a couple of them, you could do really well. For example, I recently spoke to a guy who owns a bunch of jersey mikes and he does really well with those jersey mikes, but he has a bunch of different locations. I've spoken to people recently who own a crumble cookie franchise and they own one franchise and they're hoping to buy some more. I've spoken to people all over the place who love the franchise model and so could be another option for you if you're really looking to do wealth accelerators in this way. And really trying to accelerate your path to wealth. But if you have a nine to five, if you're working a full time job and you're not an entrepreneur, this can be a difficult endeavor to work through. I own businesses so I have the flexibility to kind of make my own schedule. My schedule is jam packed every single day. But it is something where I have time to make that schedule and I am in charge of that schedule. If you're not in charge of your schedule because you're working a 9 to 5, it's a little more difficult to do this model. So that leads me to number three, which is real estate. And real estate is something that I absolutely love. I've invested in real estate. I started in 2017, was the first year I started to invest in real estate outside of obviously my personal residence or anything like that. And real estate is a fantastic wealth building vehicle. You can do it and have a full time job. In fact, I read a book, I can't remember what the name of it is, but this police officer owned 82 different rental properties and still worked as a full time police officer. And he was talking about how he managed those rentals and the entire process that he utilized. So you can definitely invest in real estate and have a full 9 to 5 job. So your job is actually going to dictate a lot of this. And when you invest in real estate, what is the number? One thing we want to make sure that we do correctly is run the numbers correctly. And so we have a rental property calculator that you can go out there and buy. I think it's 19 bucks or 17 bucks that helps you run the numbers. It takes you through each of the steps that we talk about on this show to run the numbers. If you are ever interested in that, please let me know. And it's usually in the show notes too. So those are some of the ways that I would look to invest. If you're looking for major wealth accelerators, it be a taxable brokerage account, investing in small business and investing in real estate. Now outside of those different avenues you could do things like diversified bond investments if you want some lower growth stuff outside of your tax efficient accounts. If you do have a high deductible health plan, you could do an HSA if you are not already doing that. And then lastly is you can always just start to increase your savings rate and then put it towards different investments in that route. Now is crypto in my portfolio? Not really. I mean I have a very small portion early on of bitcoin And Ethereum, Bitcoin would probably be the only one that I'd even be interested in right now. If you want to have 5% or less of your portfolio in crypto, you know, that's more power to you. That is something that you can definitely do. I would not have 50% of my net worth in crypto. But if you want a smaller portion of your net net worth in crypto, that is completely fine to me, as long as it's Bitcoin or one of the major ones, Bitcoin or Ethereum, preferably just keep it. Within Bitcoin, we at least know Bitcoin is something that has some value. And again, the reason why I don't invest a ton into it is it has no intrinsic value. It's similar to gold. It's worth whatever somebody else is willing to pay for it. It doesn't have a cash flow statement. It doesn't have a balance sheet. But at the same time, I understand why crypto is valuable to a lot of people. And it's something probably that's going to continue to grow over time. It's just not something I put a lot of my dollars, I do dollar cost averaging into it slowly, but it's just something I don't put a lot of dollars into. It's not a major part of my plan whatsoever right now. So those are some other areas that you can look into. But really business, something that I can control, that I can touch real estate, another thing that I can control, a touch outside of those retirement accounts is going to be very big. In addition to the taxable brokerage account, I'd like to beef up that taxable brokerage account as big as I can possibly get it. I really, really think that is a great place to keep cash as well. So in any event, this is some great spots to put and park those money. And you can also do things like real estate notes and those types of things. But really, I like businesses, I like real estate. Those are my two favorite places to park that money. Let me know if you have any other questions. And congratulations on maxing these out. That is absolutely amazing that you are doing that. That means you are really accelerating your path to wealth. And I cannot wait to see what you do, especially that you're approaching 40 and you're knocking out those retirement accounts. That's absolutely fantastic. Managing your finances today can feel overwhelming, with accounts, investments and budgets all over the place. But Monarch Money makes it easy. They put all of your accounts, your credit cards, your investments, and even real estate in one Financial Dashboard Monarch is a top rated all in one personal finance app. You get a comprehensive view of all your accounts, investments, transactions and more. You can create custom budgets, track progress towards your financial goals and collaborate with your partner. 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So you can actually transfer unused funds from a 529 plan to yourself and use them for qualified education expenses. So this includes studying abroad as long as the institution you plan to attend is eligible. And so kind of what you clarified here is, hey, qualified expenses include tuitions and fees, books, supplies, equipment required for enrollment, computers, Internet access and related software, room and board, but only if the student is enrolled at least half time and up to the amount determined by the school. And then what are non qualified expenses? Non qualified expenses are transportation, travel related expenses, health insurance, lodging out outside of the school's approved room and board costs, and entertainment. So yes, what I assumed is that people would also assume that you have to use the 529 for the qualified expenses and that's the reason why you can get that deduction. So if that was unclear to anybody listening to the show, you have to use the 529 plan funds, if you're going to study abroad for room and board, that is approved as an education expense. So you can still do it for room and board, studying abroad. That's absolutely true. But it has to be room, board that is part of those qualified education expenses. Now, this is not a business, so it should ever be assumed that travel is included in something like a 529 plan that would never be included in something like that. So transportation or travel related expenses, health insurance would never be included, and I'm not sure why that was assumed. Lodging outside of the school's approved room and board would never be included. And entertainment obviously would never be included. The government's not going to give you tax breaks on entertainment. The way to do this though, is this is the cool thing, okay? And for those of you who didn't hear the episode, what we talk about here is if your child does not use their 529 plan, one of the creative options that I've heard people do is they take their 529 plan and they transfer it to their name. And I'll talk about the steps on how to do this in a second. They transfer it to themselves, and then from there they go and study abroad and take a few classes abroad and. And they have free room and board on campus of those schools and they are able to go and live abroad for a couple of months. And you can utilize that money in a creative way without incurring the penalty. Or you could also just take the penalty that comes along with the 529 plan. And now you can roll about 35,000 into a Roth IRA into your kid's name also. But if you wanted to transfer it into your name and you wanted to do some continuing education things, you could do it for all kinds of different types of education. So it doesn't have to be studying abroad, but studying abroad is a cool way to be able to travel. You just got to get yourself there. And so to get yourself there for free, one of the ways to do that is the travel hack, which we have episodes on that. But outside of that, you can also just kind of pay for the flight. Obviously, you fly over for a thousand bucks to France, for example, you pay $1,000 ticket to fly over to France, and now you're there, you take the room and board that the school offers, which a lot of times they will have apartments, things like that, and you are in that location and you can pay for it through your 529 plan. Now, the way that you transfer it to yourself is a, you can change the beneficiary of a 520 plan to yourself or another family member. This can be done without taxes or penalties as long as the new beneficiary is a qualifying family member, which includes yourself. And then qualified expenses. So the 529 funds can be used for qualified educational expenses. This means it's tuition, it's fees, it's books, it's room and board if enrolled at least half time, and even if studying abroad. And then the international school must be eligible for federal student aid programs. That's a big key there. And then lastly, if you use them for non educational expenses, you're going to be subject to the income tax and a 10% penalty. So you'll be taxed and you'll get the penalty, which can be something that you want to make sure that you watch out for. So people who do not want to get taxed on that, that still want to study abroad, they take some classes abroad. And again, there are classes abroad that are a lot easier than other classes that are abroad. So you can take classes abroad, live in one of the, you know, school approved apartments, and you can be traveling and, you know, learning some stuff at the same time. So people do that. It is an interesting way to use the 529 plan, especially if like your kids get scholarships, for example, and now you have all these 529 funds locked up. You know, you and your spouse can go travel abroad, spend some time in different areas if you are retired. So it's a really cool, interesting, unique way to be able to use these funds. So I appreciate you sending this question again. Yes, to clarify, you are correct. But this would never be approved for anything. You cannot use it for, for things like airfare, train tickets, that kind of stuff. You cannot use it for travel related expenses, you cannot use it for health insurance, you cannot use it for lodging outside the school's approved room and board costs, and you cannot use it for entertainment. So if that was a discrepancy for anybody else, you cannot use it for that. But you can use it for again, tuition and fees, books, supplies and equipment required for enrollment, computers, Internet access, you can use it for related software and you can use it for room and board, but only if the student is enrolled at least half time and up to the amount determined by the school. So simple rules, they are rules that have to be followed in any education environment. And I think it is a really, really cool and interesting way to be able to study abroad. So awesome. Thank you for sending that in and helping us go through this so we could clarify it for everybody else if there was any questions there and appreciate the question. Andrew, I love your show and thanks for the great content you put out there. I am regularly sharing episodes with my kids and friends. My question for you. I am acquiring a new business and recently sold one of 17 years. Absolutely awesome. Congratulations. I historically used the desktop version of QuickBooks, but now that they are pretty much forcing you to use the online version, which I dislike for a couple of reasons, I am hoping you might be able to suggest a different accounting software for a small business. It's a simple retail service business with limited labor, no invoicing required or limited invoicing. I would love an interface with our bank and credit card and ideally our POS at some point and something that doesn't have a high ongoing fee. Any suggestions and thanks and keep up all the great work you are doing. So first of all, congratulations. Thank you for sharing the show. Congratulations on selling your business and acquiring another one. QuickBooks has made a lot of changes over the course of the last year. A lot of people who are used to the desktop version are definitely complaining that they are only going online. I personally still use QuickBooks, so I use it for most of my businesses and the reason for that is it's just easy, it's cheap and it's something that I'm just familiar with now. Most of it I've handed it off to my CPA as of recent and they kind of handle most of those transactions for me. But at the same time, you know there are some great options out there and some that I have been told are even better than QuickBooks and I'm going to kind of run through some of those today and see what you like. Now when it comes to POS systems, one of our business spends a lot of money on our POS system and fees and it is one of the most frustrating systems. Now the ways to save on POS systems is one you can find a local person that can probably save you some money and if you don't have a lot of ingrained transactions like into your website or things like that, this can be a great option for us. It's much harder to change because we have so many different offerings in this specific business I'm thinking about right now, we have so many different offerings that it's very difficult for us to change. But if yours is simple like you're talking about here, you can find a POS system that could be cheaper. I would just kind of price those out. We use Square, but there's a bunch of other ones out there that you can use that I think are a lot cheaper. I know Square is not the cheapest, that's for sure. But Square does make it easy to kind of go through the process and integrate with some of the other things that we need that kind of helps us through that process. So accounting software. Wave Accounting is one. So Wave is only cloud based accounting software that offers definitely a simple interface. It is actually free to use and it has paid add ons like payroll, things like that. If you are looking for payroll and you can have bank and credit card integration and it's got a pretty simple interface. So that is a really good one. Now it has limited features, it doesn't have inventory management and it has limited integrations with POS systems. But if you're looking for the cheapest option, Wave is very cheap. Another one that's affordable is Zoho Books. And Zoho Books is part of the Zoho suite of business apps. If you've ever seen those, they have a lower cost compared to QuickBooks and it does support bank integration, expense tracking and user friendly interface with POS integration. So that is another one. I think it's 15 bucks a month starting off and so it can be cheaper than QuickBooks is Xero which is moderate cost. Xero Xero is one that I know a lot of people love. It is also cloud based and it has really great features that I know people love and POS systems and payroll add ins are all on there too. There's one I've never really used that I've seen people recommend called Manager IO that is one that does have a desktop version that might be appealing given your preference for desktop software. It is simple to use, but it's about 39 bucks a month. But they do have a desktop version. So if you're looking for that, Manager IO is a great one and then FreshBooks is one I know a lot of people love. And FreshBooks is more user friendly than QuickBooks by far, but it has less in depth functionality for complex accounting. It sounds like you don't have complex accounting accounting, but it's good for businesses that prioritize simplicity. FreshBooks start at 17 bucks a month. It is one I've heard some wonderful things about all. So if you're trying to just simplify everything, I've heard some great, great things about FreshBooks have not used it personally, but those are like the five I would look into outside of Quickbooks again, I use QuickBooks, you know, just because I'm familiar with it, I understand where it's going, I can produce the reports I need, I can do corporate financials, those types of things. And so QuickBooks helps me with that process. But if you don't need all that stuff, if you don't need all the advanced payroll stuff, you don't need all the extras, then go in and just grab one of these and I think they can help you kind of reduce some of those costs without any add ins. So I know there are a lot of experts out there that can also help you with this. Like if you go to upwork.com if you want people to manage your books a little bit or just help you with some of the transactions, you can find people on there for like 10 bucks an hour who will help manage your books. And I know there are a lot of zero experts and freshbooks experts out there. So those two, if you're looking for an expert to help you, because QuickBooks has a million experts. But those other two options do have have a lot of experts out there as well. So hopefully that helps. I think that there's a ton of great options out there and accounting is just going to continue to advance. It may be something that AI does some pretty cool stuff with, which I'm interested to see. But right now we're still kind of having to do some manual work in accounting, which is just part of owning a small business, which is frustrating. It's probably my least favorite part of it. But at the same time it is probably one of the most necessary parts as well and it keeps you on top of of your book. So thank you so much for sending in the questions. Congratulations on your new business. Congratulations on selling your business. Sounds like you are doing some really cool stuff and I appreciate you sharing the show and listening. Thank you so much. And if you have any other questions, please reach out. All right, so this last question is brought to you by Delete Me. And if you don't know what Delete me is, DeleteMe is by far my favorite way to start your financial protection plan. And it is a service that helps remove your personal information from online data brokers. Now if you don't know this already, online data brokers are selling your information and there's not a lot of laws or regulations around who they can sell this information to. And your information is out there on the Internet for a lot of people to find freely and or they can also buy your information. If some of these data brokers have your information. 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Well, that is absolutely amazing and thank you so much for listening. I am a relatively new investor and my investing style most closely resembles a dividend growth investor. I've been wondering why the stock prices and returns look so different on the X date. Can you explain what happens in general to stock prices on and around the ex dividend dates? Also, I have yet to find a comprehensive rundown on tax implications for taxable brokerage accounts specifically regarding dividend income. Can you explain what kind of dividend payments are best for retirement accounts and what kind of dividends are good to go in a taxable account account? Thanks a lot. Alright, so this is going to be a couple of parts here that we're going to go through here and kind of explain all this stuff. So when it comes to stock prices in the ex dividend date, so what happens on the ex dividend date? So the ex dividend date is the cutoff day to be eligible to receive that dividend. It is the day that's cut off that you have to be invested in the stock to receive that dividend. If you own a stock before this date, you qualify for the upcoming dividend. On the ex dividend date, the stock stock price typically drops by the amount of the dividend. So this happens because the value of the dividend is essentially subtracted from the company's equity. So let's do an example of this because sometimes these are just easier to think through with an example. So let's say a stock is trading at $50 and announces a $2 dividend on the ex dividend date, the stock price might drop to $48 because the company is now worth $2 less after paying that dividend. Now, returns around the ex dividend date might seem off because part of your return is now coming from the dividend payout, which is the cash, obviously, rather than coming from the stock price, you might see the price drop. But your total return includes the dividend itself. And the dividend and the company's price are interconnected and they can move separately due to market factors, earning reports or investor sentiment. So stock prices in the ex dividend date, that's kind of how they work and operate. If anybody listening has not seen how those operate. Now next, tax implications in taxable versus retirement accounts. So dividends are taxed differently depending on whether they are qualified and ordinary or non qualified dividends and whether they are in a taxable account and or a retirement account. And we actually did an episode with Rachel Camp from Camp wealth and she does some great details on this too if you want to go back and check out that episode. But here's the difference here. So we have qualified dividends. If you don't know what a qualified dividend is, these are taxed at a more favorable long term capital gains rate. So 0%, 15% or 20% depending on your income level. And to qualify, the dividends must come from US companies or qualified foreign companies. And you must hold the stock for a specific period which is usually more than 60 days during 121 day period surrounding that ex dividend date. Now, qualified dividends are ideal for taxable accounts like a brokerage account because they benefit from that lower capital gains tax rate. Now, non qualified dividends, these are taxed at your ordinary income tax rate, which could be higher depending on your tax bracket. And typically non qualified dividends are usually better for retirement accounts. So usually like ordinary dividends are better suited for things like your Roth IRA because your Roth IRA can grow tax free. So I like to have these ordinary or non qualified dividends in something like a Roth IRA if you can. This is where your income grows tax free and tax deferred. If you're in a 401 now dividends in a taxable brokerage account, you're going to owe taxes on dividends each and every year year, whether you reinvest them or not. Qualified dividends again get the favorable tax treatment. So prioritize high quality dividend paying stocks in taxable accounts to benefit from that lower tax rate. And then reinvesting dividends is still taxable event. So if you're thinking reinvesting dividends might save you on taxes in that year, that is still a taxable event. I would advise you to reinvest your dividends. But it is still a taxable event to get a dividend. And then again dividends and retirement accounts are going to grow tax free. Now Schedule K is another question that you had here because at the end of the question you asked what is a Schedule K tax form and are they worth the trouble? So typically a Schedule K1 tax form is going to be something that you receive when you invest in partnerships. So like I have partnerships that I'm invested in with businesses that I own. So everybody gets a Schedule K1 during that partnerships. But there are other ways that you can get this too, like with MLPs or Master Limited Partnerships. REITs and Real Estate Investment Trusts can give you schedule K1s and other business entity structures if at all possible. I would try to avoid investing investments that give you Schedule K1 only because it just complicates your tax situation. Now if you're investing in REITs, I understand why you would invest in REITs. And so that may be one reason to do it. But are they worth the trouble? They can be a big, big hassle in my opinion, because you have to report your share of the income on your taxes, even if the partnership does not distribute any cash. And they are notorious for arriving late, which means it's going to delay your tax returns in a lot of different situations. So to answer all your questions, the ex dividend date stock prices usually drop by the dividend amount on the ex dividend date. And the difference you see is the market adjusting for the upcoming payment. I would use qualified dividends in taxable accounts for lower tax rates and keep ordinary dividends in retirement accounts to avoid that yearly taxation and Schedule K1s. I would try to avoid them as much as possible only because they add complexity to your tax return. That probably is not necessary. So I hope this breakdown helps you through that process again. One of my favorite dividend books that I have ever read by the way for a dividend growth investor is called called the Single Best Investment. If you have not read that by Lowell Miller. Unbelievable book. It makes you want to go all in on Dividend Investing is a really, really fantastic book if you are a dividend investor. So make sure you check that out if you have not already. So thank you again for submitting the question. Absolutely amazing question and really, really appreciate you. And I want to thank everybody else who is listening to this podcast for investing in Yourself because it's exactly what you're doing when you listen to the show as you are investing time and energy in yourself. Can I thank you guys enough for joining us today here on the personal finance podcast. Don't forget to share this with a friend. Don't forget to subscribe to the show, join us on YouTube all the fun things. And thank you again. I appreciate you. I will see you on the next episode.