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Virginia, Northern Neck | Yes, USFR has no capital gains, just the interest on the dividends.
It is a stable asset, no growth of principal, just interest payments.
We only got into USFR the last couple of years, before that we used medium and long-term Treasuries for our stable assets.
When interest rates rose, and our stable assets lost value, we fell in love with "floaters."
At this time, we appreciate that USFR "floaters" return almost the same as longer term Treasury obligations, with no risk to nominal value of investment.
The only pure capital gain investment I know of is Berkshire Hathaway, no dividends, just capital gains if you sell a share.
In between, there are so many ways to store wealth, and to generate income.
Important to know, if USFR is in a taxable account, dividends are taxed at your marginal rate.
For most of us, marginal rate is higher than the 20% rate for qualified dividends and capital gains.
If you are in a state with income tax, dividends from USFR are not subject to State income tax. | |
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Retirement Finances question
