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How Will State And Local Taxes Affect Your Retirement?

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How Will State and Local Taxes Affect Your Retirement? - by Morningstar Investment Research

When deciding where to retire, many individuals and couples put lifestyle factors front and center in the decision-making process. Should they stick it out in chilly northern climes with their kids and the rest of the extended clan, or does the lure of being able to golf and sit on the beach year-round outweigh those familial considerations? Weighing such quality-of-life factors is, of course, crucial to a successful retirement. But most people getting ready to retire also, necessarily, add financial factors to their decision-making matrixes. Geographic location has a huge impact on how much you pay for housing, of course, as well as food, utilities, and other basics; where you reside is also a key determining factor in how much you pay for health-care and long-term care costs. Morningstar director of personal finance Christine Benz surveyed some of the largest categories of state and local taxes--income, sales, property, and estate/inheritance--and suggested some workarounds for folks who have decided to stay put in a high-cost locale.

Don't Get Carried Away With Floating-Rate Funds

A friend recommended I look into floating-rate funds for my fixed-income portfolio to protect against a rise in interest rates. How do these funds work, and how do I know if they're right for me?

Morningstar assistant site editor Adam Zoll said that given many financial professionals' expectations that interest rates will rise in the not-too-distant future, it's no wonder many fixed-income investors are considering floating-rate funds for their portfolios. The advantage these funds have over other fixed-income funds is that the interest they pay adjusts along with market interest rates. The key distinction between floating-rate securities and fixed-rate bonds involves how each investment type reacts to movements in market rates. A floating-rate security tends to keep its value if rates rise whereas a fixed-rate bond will lose value. That's because an existing bond with a fixed rate is worth less if investors can buy new bonds at higher rates. If rates drop the opposite occurs--the existing fixed-rate bond will increase in value.

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If you can't make the pilgrimage to the Berkshire Hathaway Annual Meeting May 4, has the next best thing: on-the-ground coverage from Omaha. Check out our live blog and breaking video reports featuring commentary from Morningstar's Berkshire analysts Greggory Warren and Drew Woodbury, Morningstar StockInvestor editor Matt Coffina, and markets editor Jeremy Glaser. Also see our many articles and videos on Berkshire's valuation, cash position, succession planning, and more.

Among the other topics we addressed this week:

Using Morningstar Analyst Ratings to Find Buy Candidates. Analyst Ratings + Premium Fund Screener = good ideas.

Defensi ve Sectors, the Playground of Dividend-Themed Funds, Look Overvalued. Demanding a quick return and shorter payback, investors bid up higher-yielding but potentially slower-growing stocks.

Is Apple Like Microsoft in 1995, or Like Research in Motion in 2008? Morningstar StockInvestor editor Matt Coffina discusses the bull and bear cases on Apple.

American Century Sends Livestrong Brand Into Retirement. Plus, a new manager for T. Rowe Price New Era, DWS fires a subadvisor, Matthews launches 2 Asia funds and makes manager changes on 2 other funds, Cohen & Steers founders pull back, and a Waddell & Reed bond manager to retire.

Are Either of These Freshly Minted CEFs Worth Buying? We look at two recent CEF launches.

A Tale of Two Yields: Part I. What a comparison of a fund's trailing 12-month and SEC yields can tell us.

These Funds Should Cut Their Distributions. Poor distribution policies can be a detriment to CEF shareholders.

Crowdfunding 2.0: Where Will It Go? Congress has created a set of rules that will make equity crowdfunding too cumbersome for most businesses, but there is still a chance to get it right.

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