SmartInMoney

 

Under provisions of the Emergency Economic Stabilization Act of 2008, the U.S. Treasury has issued new regulations that will require investment companies and brokers/dealers to begin reporting to the IRS the cost basis of securities you acquire in 2011 or later and subsequently sell or transfer.

The new rules phase in from January 1, 2011, through January 1, 2013, depending on the security’s type. Securities acquired before their class’s specified starting date are considered “uncovered” securities and brokers aren’t required to track cost basis for these securities. Securities acquired on or after their class’s specified date are “covered” securities and their basis and holding period must be tracked and reported.

The important regulatory changes have arrived this year (2012) for mutual fund investors. The new regulations require investment companies or broker/dealers to report cost basis information for sales in taxable (nonretirement) accounts to the IRS as well as to you as an investor for mutual fund and most exchange-traded fund (ETF) shares that were acquired on or after January 1, 2012, and then sold after that date. Investment companies report this information to you and the IRS on your Form 1099-B. Previously investment company reported this information only to you.

You'll need to select a preferred cost basis method before you sell shares of mutual funds (excluding money market funds) and most ETFs in your taxable (nonretirement) accounts:

• Average cost. Calculates the average cost per share for each share you own.
• First in, First Out (FIFO). The first shares you acquired will be the first ones we sell.
• Specific identification. At the time of sale, you choose the shares (or lots) to sell, which will determine your capital gain or loss.

The cost basis method you choose can affect your capital gains or losses, which could influence how much you owe in federal taxes. Read more

SPDR S&P 500 (SPY)
iShares MSCI EAFE Index (EFA)
iShares MSCI Emerging Mkts Index (EEM)
iShares Russell 2000 Index (IWM)

 

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ETF assets hit an all time high

 

Exchange traded funds (ETFs), which trade on exchanges like individual stocks, continue to enjoy considerable momentum as an investment vehicle given their ability to offer exposure to such a wide variety of asset classes, regional markets, and sectors with relative ease on a real-time basis during the trading day at a lower cost than many other forms of investment vehicles.

 

The ETF benefits have attracted many institutional investors and retail investors since the first launch in U.S. in 1993. In contrast with regular mutual funds that have been around for more than 80 years, the U.S. ETFs enjoyed $47.4 billion inflow in the first seven months of 2009 while regular mutual funds suffered an outflow of $50.6 billion. Continue reading

 

Exchange-traded funds (ETFs) keep flourishing as they recorded their largest month on record in July with US$646-billion in assets, according to Birinyi Associates.

 

Exchange traded funds in their basic form are baskets of securities that are traded, like individual stocks, on an exchange. Funds can track any number of indexes from the large-cap S&P 500, small-cap Russell 2000, or even commodities. Most of ETFs on the market currently are passively managed, tracking a wide variety of broad to narrow market indexes. Continue reading

 

Investors kept pumping more money into U.S. mutual funds and exchange-traded funds (ETFs) in December, finishing 2008 with a flourish. Behind the industry expansion, stock mutual funds suffered record net outflows. Continue reading

 

The recent revelation of a multibillion-dollar Ponzi scheme run by Madoff reinforces classic investment advices, especially for individual investors. The investors may be in the dark and exposed to investment scheme when they hand their money over to someone else called financial wizards. Good news, these days it is pretty straightforward to invest your money prudently and have direct control on them. Continure reading