When we sold our company my partners and I received a lot of stock from the acquiring company. We used one of the largest accounting firms in the world for our business and, at some point, they suggested we hire them for our personal returns so that our personal returns made sense in the context of the business.Thank you all again for your thoughtful and kind inputs. Looking into more on Exchange Funds, trying to understand what is the 7% compounded rate of return at the end of 7th year,by investing in EF vs something like VTI..
If I sell 5M worth of stocks and pay 29.52% tax and invest in VTI, what would be the historical return at the end of 7th year vs transferring 5M worth of stock to EF ?
At the first glance, EF looks attractive but in the long term, is it worth in terms of return, risk and flexibility compared to non-EFs ?
Anyone have direct experience with EF, pros and cons ? I took the below example from an EF provider.Is it accurately reflect compounded rate of return ?As always, appreciate your time and expertise.
Sell and Diversify:
Initial Value - 5M
Tax at Entry - $1,476,000 (29.52%)
Invested Value - $3,524,000
Ending Value $5,658,773
Tax on Exit (after 7 years) - $640,432
After tax ending value - $5,018,341
Benefit - $625,893
EF:
Initial Value - 5M
Tax at Entry - $0
Invested Value - 5M
Ending Value $8,020,907
Taxon Exit (after 7 years) - $2384,672
After tax ending value - $5,644,235
Benefit - $625,893
Anyhow, the relationship gave us access to partner level resources and we had them in to talk about what we could do avoid cap gains. Other than moving to a low tax state, which one of my partners did, his advice was to sell the stock , pay the taxes and get on with our lives. He felt any tax savings we might accrue would be eaten up by fees and we might end up with risk we didn’t understand.
Good luck!
Statistics: Posted by gips — Fri Sep 13, 2024 10:56 pm — Replies 65 — Views 12179