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Kevin Mercadante

6 Best Tax Software Programs in 2023 (for 2022 Returns)

January 11, 2023 by Kevin Mercadante

Some of the links in this article may be affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase or open an account. I only recommend products or services that I (1) believe in and (2) would recommend to my mom. Advertisers have had no control, influence, or input on this article, and they never will.

Tax season is right around the corner. If you prepare your own return this is about the time you’ll need to choose the tax software. To make the job easier, we’re providing this guide to the six best tax software in 2023, for 2022 returns.

The table below shows the most basic features of each of the six best tax software for 2023. A deeper discussion of each software will follow.

/table

SoftwareFree VersionBusiness ReturnsAudit AssistancePriceSupport
TurboTaxYesYesYes$0 to $359 (+$49 per state)24/7 online or live
H&R BlockYesYesYes$0 to $230 (+$37 per state)24/7 online or live
Jackson HewittNoYesYes$25 flat fee, including state return8:00 AM to 1:00 AM, Eastern Time, Mon-Fri during tax season
Cash AppYes, on all returnsLimitedNo$0 on all returns9:00 AM to 7:00 PM, Eastern time, Mon-Fri
TaxSlayerYesYesYes, on all plans$0 to $89.90Phone, email and live chat, but no hours are given
TaxActYesYesYes$0 to $109.908:00 AM to 9:00 PM, Monday through Friday; 9:00 AM to 6:00 PM weekends, all times Central

6 Best Tax Software for 2022 Tax Returns

1.  TurboTax – Best Overall

TurboTax is the software I used exclusively when I prepared my own returns. It has become the top tax software in the industry, and for plenty of good reasons. It offers five different plans, from their Free Edition to their Self-Employed plan. TurboTax Business is also available for partnerships, S corporations, C corporations, multi-member LLCs, trusts and estates. You can sign up for each of the programs free of charge and pay only when you file your return.

I’ve personally used customer support this year. I was having trouble uploading a prior year’s tax data. I received a phone call within five minutes of making the request, and the customer support personnel (I talked to two individuals) to be very professional and helpful.

TurboTax is available in both the Online and CD/Download versions, each with its own pricing. The Online version enables you to access and prepare your return from any computer or mobile device and requires no software installation. TurboTax provides tax return storage. You can prepare and file one return using this version.

The CD/Download version is downloaded onto your personal computer and does not require an Internet connection. Your tax return will be stored on your computer’s hard drive. You can prepare and file up to five returns using this version.

TurboTax Features

  • 24/7 customer support from the online community of TurboTax specialists, and even customers.
  • Download photos of your W2(s) and/or 1099-NEC.
  • TurboTax Live Assisted Basic – provides unlimited expert advice to prepare your return yourself.
  • TurboTax Live Full Service – you’ll be matched with a dedicated tax expert who will prepare your return for you.
  • Both TurboTax Live Assisted Basic and Live Full Service are available in Spanish.
  • Audit Support Guarantee – provides free step-by-step audit guidance if you are contacted by the IRS, plus the option to connect with a tax expert.
  • TurboTax Audit Defense – provides live representation during an audit, requiring payment of an additional fee.

TurboTax Plans

Free Edition

  • Can be used for W-2 income, limited interest and dividend income, standard deduction, student loan interest deduction, the earned income credit, and child tax credits.
  • You can also include hobby, personal property rental or personal items sales reported to you on Form 1099-K.
  • Comes with a TurboTax Audit Support Guarantee.
  • The plan itself is free, and you can file both federal and state income tax returns for free (limit one state return).
  • You can file your return using the mobile app.
  • Price: Free (of course!)

Basic (CD/Download version only)

  • All the features of the Free Edition but allows you to download the software and store your returns on your own computer.
  • Price: CD/Download version: $40 + $40 per state return; $0 (1 state included) for Live Assisted Basic; $169 (+$49 per state) for Live Full Service.

Deluxe

  • All the features of the Free Edition.
  • Itemized tax deductions.
  • Over 350 deductions and credits.
  • One-on-one help on-demand.
  • Price: Online version: $39 + $39 per state return; CD/Download version: $70 – includes one state return, then $40 for each additional state return; $89 for Live Assisted Basic (+$49 per state); $219 (plus $49 per state) for Live Full Service.

Premier

  • All the features of the Deluxe Edition.
  • More than 450 deductions and credits.
  • Accommodates stocks, ESPPs, bonds and other investments.
  • Import your investment income information.
  • Covers rental properties.
  • Price: Online version: $69 + $39 per state return; CD/Download version: $105 – includes one state return, then $40 for each additional state return; $139 (+$49 per state) for Live Assisted Basic; $329 (+$49 per state) for Live Full Service.

Self-Employed

  • All the features of the Premier Edition.
  • Designed specifically for the self-employed.
  • 500+ tax deductions and credits, including industry-specific deductions.
  • Calculates asset depreciation, as well as mileage and vehicle deductions.
  • Import financials from QuickBooks Self-Employed.
  • Import Rideshare and UberEats data.
  • Unlimited employee forms, including W-2s and 1099s, even if you’re not using payroll.
  • Comes with personalized audit risk assessment and self-employed tax guidance.
  • Price: Online version: $89 + $39 per state return; CD/Download version: $120 – includes one state return, then $40 for each additional state return; $169 (+$49 per state) for Live Assisted Basic; $359 (+$49 per state) for Live Full Service.
Try TurboTax

2.  H&R Block – Best for Those Wanting Physical Locations

The name “H&R Block” is practically synonymous with income tax preparation. The company has been in business since 1955. Though they offer the full range of online tax-preparation software products, the company also has more than 12,000 local tax-preparation offices staffed by employees with an average of 10 years of experience.

That makes H&R Block the perfect tax software for particularly complicated returns. You can start out preparing your own return and switch over to a live tax pro to finish the job any time you feel overwhelmed. And with so many local offices, you can take advantage of face-to-face contact if that’s your preference.

Be aware that if you choose to have your return prepared by an H&R Block tax professional the pricing presented below will not apply. The fee you will pay will be based on the type and complexity of your return.

H&R Block Features

  • Import or snap a photo of your W-2.
  • Audit support guarantee.
  • Maximum refund guarantee.
  • Real-time refund results.
  • Six years storage of tax documents for up to six years if you use Deluxe e-file.
  • Refund Advance loan of up to $3,500 within minutes of filing your taxes.

H&R Block Plans

Free Online

  • Available for simple returns, including students, and those with W-2 income, retirement income, unemployment compensation, the earned income credit, and child tax credits.
  • Price: $0 to prepare and file both federal and state returns; $40 (no additional fee for a state return) with unlimited, live help from tax pros.

Deluxe

  • All the features of Free Online.
  • Accommodates contract, freelance, gig work, and other small, self-employment income; itemized deductions, child and dependent care expenses, and HSA contributions.
  • Price: $35 + $37 per state return; $70 (+37 per state) with unlimited, live help from tax pros.

Premium

  • All the features of Deluxe.
  • Covers stocks, bonds, and other investment income, crypto currency sales, rental income and deductions.
  • Price: $55 + $37 per state return; $115 (+37 per state) with unlimited, live help from tax pros.

Self-Employed

  • All the features of Premium.
  • Designed for small businesses, including all business deductions and asset depreciation.
  • Price: $85 + $37 per state return; $145 (+37 per state) with unlimited, live help from tax pros.
Try H&R Block

3.  Jackson Hewitt – Best for Multiple State Returns

Much like H&R Block, Jackson Hewitt also has a large network of tax-preparation offices across the country. As the second-largest tax-preparation service (after H&R Block), the company has more than 6,000 local offices, including more than 3,000 located in Walmart stores. It’s also one of the most popular online tax software services, but with the option to shift your return over to a live tax professional at any point during the process.

The single flat fee structure used by Jackson Hewitt makes it an excellent choice if you have multiple state returns to prepare.

And again, like H&R Block, there is a separate pricing structure if you have your return prepared by a tax professional in a Jackson Hewitt location.

Jackson Hewitt Features

  • File online, or in-store (standalone offices or Walmart locations).
  • One price for all tax return types – $25 includes both federal and state returns.
  • Accommodates both simple and complex returns.
  • Online customer support.
  • If you are due a refund you may not need to pay the fee using a credit card.
  • 100% accuracy guarantee.
  • Maximum refund guarantee.
  • Satisfaction guaranteed.
  • Transparent pricing guarantee.
  • Three-year price lock guarantee – fee structure applies to this year, next year, and the year after that.

4.  Cash App Taxes (formerly Credit Karma Tax) – Best Free Software

Credit Karma Tax is now Cash App, offering the same, simple and free income tax-preparation. That’s free as in free to file no matter how complicated your tax situation is. It’s also convenient; you can file your tax return from either your computer or your smartphone. And if you have your refund deposited into your Cash App, you’ll get your money up to five days faster. The company claims the service has been used to prepare more than 3.8 million returns.

To use Cash App Taxes, you will need to download the Cash App. It’s an app that provides banking services, including the ability to send and receive money free of charge. You can also use the app to buy and sell stocks and bitcoin. And when you download Cash App Pay and Cash Card you’ll have access to exclusive discounts. Cash App is free to download and to use.

Cash App Features

  • One plan for all tax situations.
  • Free tax software that includes both your federal and state return.
  • Accommodates simple and more complex tax returns.
  • Access returns previously filed with Credit Karma Tax.
  • Phone and live chat customer service.
  • You must sign up for the Cash App to access the tax software.
  • Free, but historically not the best choice for more complicated returns, like, self-employment or substantial investment activities.
Try Cash App

5.  TaxSlayer – Best for Comprehensive Service at a Low Price

TaxSlayer has come up as one of the most popular tax software services in the industry. What makes it particularly attractive is that its low-cost structure also includes its Ask a Tax Pro and Audit Defense services on all plan levels. And like Jackson Hewitt, you can deduct the cost of the service from your refund (if you’re entitled to one), rather than paying by credit card. The software comes in five versions, including one designed specifically for active duty members of the US military.

TaxSlayer Features

  • Comprehensive plans that include service features other software charge additional fees for.
  • Special plan just for active duty members of the military.
  • One of the lowest fee structures among all tax software services.
  • Download the app free and file your return on the go.

TaxSlayer Plans

Simply Free:

  • File a basic 1040 tax return.
  • Includes student loan interest deduction and education credits.
  • Unlimited phone and email support.
  • Price: $0 to file both federal and state returns.

Classic:

  • Includes all the features of Simply Free.
  • Covers any tax situation and all major IRS forms.
  • Import your W-2(s).
  • Comes with IRS inquiry assistance for up to one year after your return has been accepted.
  • Price: $19.95 +$39.95 per state return.

Premium:

  • Includes all features of the Classic plan.
  • Unlimited personal guidance from a tax expert.
  • Priority support for both phone and email assistance.
  • Certified tax professionals to assist you with an audit for up to three years after your return has been accepted by the IRS.
  • Price: $39.95 +$39.95 per state return.

Self-Employed:

  • Includes all the features of the Premium plan.
  • Designed specifically for small business owners, contractors, and side hustlers.
  • Schedule C preparation, including income from Form 1099.
  • Tax tips and resources specifically for the self-employed.
  • Tax payment reminders, including printing of 1040-ES estimated tax payment vouchers.
  • Support from a tax expert with self-employed tax expertise.
  • Price: $49.95 +$39.95 per state return.

Military:

  • Free federal filing for active-duty military members.
  • Accommodates all tax situations, including all major IRS forms, credits and deductions.
  • Comes with IRS inquiry assistance for up to one year after your return is accepted.
  • Price: $0 +$39.95 per state return.
Try Tax Slayer

6.  TaxAct – Low-Cost Tax Software

TaxAct is another of the most popular tax software services around, with the advantage of providing lower-cost plans than most competitors. And even with the low-cost fee structure, TaxAct can accommodate all return types, including self-employed and sophisticated investments. They even offer special software for various types of business returns.

TaxAct Features

  • All plans include Xpert Assist, which provides live support calls with tax experts.
  • Audit Defense available, with tax professionals to deal directly with the IRS for up to three years. The service is available at an additional fee, which is not disclosed on the website.
  • Specialized business plans for partnerships, S corporations, C corporations, tax-exempt organizations, and estates and trusts, each at $124.95 + $54.95 per state income tax return filed.
  • Mobile app available.

TaxAct Plans

Free

  • Cover simple returns, including W-2 and unemployment income, retirement income, child tax credits, earned income, current students, and stimulus credit.
  • Xpert Assist included.
  • Price: $0 + $39.95 per state return.

Deluxe

  • All the features of the Free plan.
  • Can be used for itemized deductions, adoption credits, child and dependent care, student loan interest, and health savings accounts.
  • Deduction maximizer.
  • Personalized My TaxPlan.
  • Price: $24.95 + $44.95 per state return.

Premier

  • All the features of the Deluxe plan.
  • Covers investment income, rental properties, royalty and Schedule K-1 income, and foreign banks and financial accounts.
  • Unlimited free account and technical support.
  • Price: $34.95 + $44.95 per state return.

Self-Employed

  • All the features of the Premier plan.
  • Designed for business and farm income, freelance income, and personalized business deductions.
  • Calculates depreciation.
  • Deduction maximizer and year-round planning resources.
  • Price: $64.95 + $44.95 per state return.

All-Inclusive Bundle

  • Includes access to all online forms, and one state return.
  • Filing fees subtracted from refund.
  • Audit Defense included.
  • Price: $114.95

Tax Software FAQs

What is the best tax software for real estate investors?

I owned investment properties since 2005 (sold my last one in 2018). In my experience, TurboTax was the best option to handle the tax complexities real estate investors face. Most rental property management software works well with TurboTax.

What is the best tax software for small business owners?

I’ve owned and operated a small business since 2008. For me, TurboTax is the best option. I’ve found it the easiest to use and its customer service has been exceptional.

What is the best tax software for retirees?

In most cases, the best software will depend on the specific circumstances of the retiree. In most cases, TurboTax or H&R Block would prove to be the best options. For very simple returns, a retiree might also consider Cash App.

What is the best tax software for independent contractors?

Both TaxSlayer and TurboTax offer versions specifically designed for the self-employed. I’ve found both apps to be easy to use. TaxSlayer will likely prove to be less expensive, although TurboTax’s customer support is excellent.

What is the best tax software for investors?

Just about all tax software packages can handle capital gains and losses that investors experience. My personal favorite is TurboTax.

What is the best free tax software?

Most tax software offer a free version for very simple returns. The one software that is free for everybody is Cash App. While I like that option for simple returns, it’s not ideal for those with more complicated taxes (itemized deductions, small business, investors, etc.).

What is the best low cost tax app?

Jackson Hewitt is the best low cost option for tax preparation software. That said, I found it not be the easiest to use. If you can overlook the mediocre user interface, you can save some money using Jackson Hewitt.

Bottom Line

Preparing your own tax return doesn’t need to be a hassle, that is, as long as you choose the right tax software for the job. Any of the six in this guide will help you get the job done. Just be sure to carefully examine the service levels and features provided by each then choose the one that most closely matches your own tax situation.

Filed Under: Investing

13 Best Investment Broker Bonus Offers of 2023

December 22, 2022 by Kevin Mercadante

Some of the links in this article may be affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase or open an account. I only recommend products or services that I (1) believe in and (2) would recommend to my mom. Advertisers have had no control, influence, or input on this article, and they never will.

Like many other businesses, investment brokers sometimes offer bonuses to encourage investors to sign up with their services. Not all brokers offer a sign-up bonus, but a surprising number do. In this article, we’ll look at the 13 best investment broker bonus offers available in 2023.

Be aware that each of these bonus offers has an expiration date. Where available, we’ve included that date in our summaries. However, many brokers assign a cutoff date, then extend it each month. In that way, many expiration dates operate on a rolling basis.

Best Investment Broker Bonuses

We’ve ranked each of the 12 brokers based on a combination of 1) the amount of the bonus offer, and 2) the ease with which it can be obtained. And where it matters, we’ve also considered the amount of time required to tie up funds to qualify for the bonus offer.

Ultimately the merit of any bonus will depend primarily on your own personal circumstances. For example, if you have a seven-figure investment portfolio to transfer from another broker, it may simply be a matter of choosing the most generous bonus offer.

1. M1 Finance – Get Up to $4,000

M1 Finance is one of the best robo-advisors today, in my opinion. It charges no management fee and empowers investors to create a portfolio of ETFs and stocks. It then makes rebalancing the portfolio as easy as clicking a button. I used M1 for about a year, and found the site very easy to use.

The amount of the bonus depends on how much you transfer to M1. Bonuses start at $100 for transferring $50,000 and go up to $4,000 with a transfer of $2 million or more. The bonus is slated to end on January 14, 2023, but M1 often extends its bonus offer.

Terms:

InvestBonus
$50k – $99k$100
$100k – $249k$250
$250k – $499k$500
$500k – $999k$1,000
$1M – $1.9M$2,000
$2M+$4,000

Note that promotional credits will be paid to eligible clients on June 6, 2023.

2.  Public – Get Up to $10,000

Public is offering a bonus of up to $10,000 when you transfer an investment account to Public by December 31, 2022. The website says the promotion will expire on that date, but it is possible it will be extended on a month-to-month basis.

Funds must be transferred from another investment broker. In addition to the cash bonus, they’ll also pay any transfer fees imposed by the other broker if the incoming account value is at least $500.

Terms:

  • Deposit $5,000 to $24,999: $150
  • $25,000 to $99,999: $250
  • $100,000 to $249,999: $1,000
  • $250,000 to $499,999: $2,500
  • $500,000 to $999,999: $5,000
  • $1 million or more: $10,000

3.  E-Trade – Get Up to $3,500

E*TRADE is paying a cash bonus, ranging from $50 to as much as $3,500 when you open a new account with as little as $5,000. You must fund your account within 60 days of opening with the required minimum to qualify for the bonus of your choice.

Existing E*TRADE customers are eligible to participate in the bonus at a reduced rate. The offer applies to brokerage and Coverdell accounts, as well as retirement accounts.

Terms:

New customers:

E*TRADE New Customer Bonus

Existing customers with current account balances between $500,000 and $999,999:

E*TRADE Existing Customer Bonus

Existing customers with current account balances between $1 million and $1,499,999:

E*TRADE Existing Customer Bonus

Existing customers with current account balances of $1.5 million and higher:

4.  Firstrade – Get Up to $4,000

Firstrade is paying a bonus, ranging from $50 to as much as $4,000 when you open and fund a Firstrade Brokerage account. To be eligible for the bonus, you must open an account and make a qualifying deposit no later than January 17, 2023. The account must be funded within 30 days of opening and includes new accounts only. The offer applies only to individual, joint or custodial brokerage accounts, and not to IRAs.

The account must remain open for 12 months and maintain the qualifying deposit to qualify for the bonus. Firstrade is also offering to reimburse transfer fees from other brokerage accounts for up to $200.

Terms:

  • Deposit $5,000 to $9,999: $50
  • $10,000 to $24,999: $100
  • $25,000 to $99,999: $300
  • $100,000 to $499,999: $700
  • $500,000 to $999,999: $1,500
  • $1 million to $1,499,999: $3,000
  • $1.5 million or more: $4,000

5.  Merrill Edge – Get Up to $600

Merrill Edge is offering a bonus of up to $600 when you open and fund a new account. You need to open an account with at least $20,000 to qualify for the minimum bonus of $100. Funds must be deposited within 45 days of account opening, and the balance maintained for at least 90 days. The offer applies strictly to a Merrill Edge Self-Directed account.

Terms:

  • Deposit $20,000 to $49,999: $100
  • $50,000 to $99,999: $150
  • $100,000 to $199,999: $250
  • $200,000 or more: $600

If you have significantly more to transfer than $200,000, you may be able to negotiate a much higher bonus. Contact a Merrill Edge advisor to get their best offer. I did this last year and received an offer of nearly $5,000, although I ended up going with a different broker.

6.  J.P. Morgan Self-Directed Investing – Get Up to $625

J.P. Morgan is offering a bonus of up to $625 when you open a new account by January 19, 2023. You must open a new Self-Directed Investing account by that date, then transfer the qualifying funds into the account within 45 days of opening. The bonus amount will be determined on Day 45.

Deposited funds must remain in your account for at least 90 days to qualify for the bonus. The bonus will be paid into your account within 15 days thereafter. The bonus applies on either taxable brokerage accounts or traditional and Roth IRA accounts.

Terms:

  • Deposit $25,000 to $99,999: $125
  • $100,000 to $249 999: $300
  • $250,000 or more: $625

7.  Citi Self-Invest – Get Up to $500

Citi is offering a bonus of up to $500 when you open a Self-Invest account between now and January 31, 2023. To qualify for the minimum bonus of $100, you must deposit at least $10,000 into your account. The bonus applies to deposits made in either new or existing Self-Invest accounts.

Funds must be maintained in the account through January 31, 2023, for deposits made by December 31, 2022, and through February 28, 2023, for deposits made by January 31, 2023. The cash bonus will be credited to your account 90 days after the funds’ maintenance date.

Terms:

  • Deposit $10,000 to $49,999: $100
  • $50,000 to $199,999: $200
  • $200,000 or more: $500

8.  Axos Invest – Get Up to $200

Axos Invest is paying a bonus of $200 when you open either a Managed Portfolios account or a Self-Directed Trading account. You must open an account no later than January 31, 2023.

The bonus will be paid on new Managed Portfolios accounts after you open an account and deposit at least $2,000 into the account within 60 days of account opening. On Self-Directed Trading accounts, you must complete at least two trades to be eligible. The bonus will be deposited into your account after you’ve completed the first two trades.

Terms:

  • Managed Portfolios account: $200, 60 days after you deposit at least $2,000
  • Self-Directed Trading account: $200 after completing two trades

9.  Charles Schwab – Get Up to $1,000

The biggest retail investment broker in America is paying a bonus of up to $1,000 when you open and fund a new account after you’re referred by an existing Schwab customer.

Like most investment broker promotions, the bonus is tiered based on the amount of funds you deposit into your account. To qualify, you’ll need to get a referral code from your Schwab friend. Funds must be deposited into an investment account within 45 days. Funds deposited into the Schwab Bank High Yield Investor Checking account do not qualify.

Terms:

  • Deposit $25,000 to $49,999: $100
  • $50,000 to $99,999: $300
  • $100,000 to $499,999: $500
  • $500,000 or more: $1,000

For higher balances, you may be able to negotiate a larger bonus. Contact Schwab directly to inquire.

10.  Fidelity Investments – Get Up to $100

Fidelity Investments is paying a bonus of $100 when you open a new account and fund it with at least $50. The bonus applies to the Fidelity Account, Fidelity Cash Management Account, and Roth and traditional IRA accounts.

New account holders will not be eligible for the bonus if they have previously participated in a Fidelity bonus promotion. However, you are eligible if you already have a Fidelity account and open one of the three accounts above.

Terms:

  • $100 when you deposit $50 or more in a new account.
  • Deposit must be made within 15 days of account opening.
  • Bonus will be paid 10 calendar days after the qualification period ends. Bonus funds must be retained in your account for a minimum of 90 calendar days.

11.  Wealthfront – Get Up to $5,000 Managed Free

Wealthfront is a robo-advisor, not an investment broker, so the bonus program works a little bit differently. They don’t currently offer a new account bonus. But you can get up to $5,000 managed free (of their normal advisory fee of 0.25%) when you refer a friend to the investment service.

Meanwhile, the friend will also get $5,000 managed free. For both you and your friend, the free management will be worth $12.50 per year. The friend must open an account using an invite you provide. The fee waiver applies only to Wealthfront investment accounts, not cash accounts.

12. SoFi Invest – Get Up to $1,000 in Free Stock

SoFi is offering a bonus of much as $1,000 in free stock when you move your portfolio from another broker into a SoFi Invest account. They’ll also cover up to $75 in transfer fees charged by the other broker. The bonus applies to new accounts only and must be funded with a minimum of $10 within 30 days of account opening.

The bonus is payable in stock, and the website discloses the likelihood of receiving a stock worth $1,000 is 0.028%. You must open a SoFi Active Invest brokerage account to qualify.

Terms:

SoFi discloses the odds of receiving stock at various values as follows:

SoFi Invest Bonus

13.  Webull – Get Up to 12 Free Stocks Worth up to $3,000

Webull is offering a bonus paid in fractional shares. When you open a Webull brokerage account, each fractional share will be valued between $3 and $300. But you can get up to 10 fractional shares when you make an initial deposit of any amount, with each valued at between $7 and $3,000. Funds must be deposited into the new account within 10 days of account opening.

Terms:

Probability of the value of account opening stock rewards is as follows:

  • $3 to $10: 1/1.02
  • $11 to $50: 1/52.63
  • $51 to $150: 1/1,111.11
  • $150 to $300: 1/10,000

Probability of the value of initial deposit rewards stock is as follows:

  • $7 to $30: 1/1.02
  • $31 to $100: 1/52.63
  • $101 to $999: 1/1,111.11
  • $1,000 to $3,000: 1/10,000

FAQ

Are investment broker bonuses taxable?

Income from just about any source is taxable at both the federal and state level. That includes investment broker bonuses. However, a broker will generally not issue a Form 1099 for the amount of the bonus unless it is at least $600, per IRS guidelines.

What are the typical requirements to qualify for an investment broker bonus?

Specific requirements vary by broker, but you can expect to see any mix of the following:
1. Opening an account by a specific date.
2. With most brokers, qualification applies only to new accounts.
3. Meeting minimum funds deposit requirements, usually by a secondary date.
4. Some brokers require funds to be transferred from an investment account held with another broker.
5. Maintaining the minimum fund balance for a specified period of time, which is often 90 days.

What happens if I don’t meet all the requirements of a broker bonus?

If you fail to meet even one requirement the broker probably won’t pay the bonus. Investment broker bonus requirements are something of a matrix. You need to familiarize yourself with all conditions of any bonus offer and be fully prepared to meet them. If not, opening a new account may not be worth doing, unless the bonus was never the main reason for doing so.

Is a bonus a good reason to open an account with a specific broker?

Generally, no. It’s important to remember that a bonus is a one-time event. What’s more important are the ongoing features and benefits a broker offers. That includes commissions and fees, customer service, investment resources and education, and the number of investments offered, among others factors.

Final Thoughts

None of the bonus offers listed in this article are set in stone. Investment brokers, like other businesses, add and withdraw offers on a regular basis. It’s also possible a broker may either reduce or even enhance a bonus offer, so always pay careful attention to the details of any program.

And once again, never open an account just because it offers an attractive bonus. Investing is serious business and has too many moving parts to justify transferring accounts in an open-ended search for the bonus du jour.

Filed Under: Investing

The 7Twelve Portfolio–A Case of Diworsification

December 2, 2022 by Kevin Mercadante

Some of the links in this article may be affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase or open an account. I only recommend products or services that I (1) believe in and (2) would recommend to my mom. Advertisers have had no control, influence, or input on this article, and they never will.

There are several different “lazy portfolios” you can employ if you like the set-it-and-forget-it portfolio concept. One of the less common – and less understood – versions is the 7Twelve Portfolio. It is one of the more complicated lazy portfolios to set up and manage, at least if you plan to do it manually.

In theory it offers a well-diversified portfolio, and one that may perform best in the worst market conditions. Its complexity combined with poor performance over the long-term, however, calls into serious question whether the 7Twelve Portfolio is right for anybody.

What is the 7Twelve Portfolio?

The 7Twelve Portfolio concept was developed by Craig L. Israelson, author of the book 7Twelve: A Diversified Investment Portfolio with a Plan (2010).

The goal of the portfolio is to enhance performance and minimize risk. As we’ll see, however,  those goals are not always accomplished. Israelson developed the concept in 2008, so the history is a bit limited.

The numbers seven and 12 figure significantly in the 7Twelve Portfolio. It involves the use of 12 different investment sectors, which loosely fit within seven different asset classes.

The seven asset classes are as follows:

1.   U.S. Stocks

2.   International Stocks

3.   Real Estate Investment Trusts (REITs)

4.   Natural Resources

5.   U.S. Bonds

6.   International Bonds

7.   Cash

If you break down the asset classes between stocks and bonds/cash, you’ll get a 65/35 split favoring stocks. That is of course very close to the ever-popular 60/40 portfolio split.

The 12 investment sectors that make up the seven asset classes for the 7Twelve Portfolio are as follows (from Portfolio Visualizer):

7Twelve Portfolio

In looking at the pie chart from the screenshot above, notice that each of the 12 investment sectors has an equal weight of 8% – or, more precisely, 8.33%. When the 12 are added together, it comprises 100% of the portfolio.

(NOTE: For the purpose of creating screenshots, I’ve used precious metals in lieu of natural resources. This is due to the fact that Portfolio Visualizer offers only standard sector descriptions, which does not specifically include the term “natural resources.” I used precious metals because it was the only option that even approximated natural resources. It may somewhat distort the results. However, it’s worth noting that precious metals, gold especially, has generally performed well since 2008 when the portfolio concept was created.)

How to Create the 7Twelve Portfolio

The easiest way to create the 7Twelve Portfolio is to match a single fund with each investment sector.

The funds used are typically index-based exchange traded funds (ETFs). That’s because these funds are specifically designed to match an index of securities within a specific sector or asset class. What’s more, they have very low expense ratios, minimizing the drag on investment returns.

And finally, use of index funds gives a portfolio sector access to a broad cross-section of securities within each sector. If one or two stocks in the group crash and burn, the impact on the fund overall will be minimal.

Example of the Funds in a 7Twelve Portfolio

We’ve put together the table below, matching a popular index fund with each of the 12 investment sectors. Most of the funds presented in the table commonly appear in portfolios managed by both robo-advisors and professional investment advisors.

AllocationsFund Example
U.S. Large-Cap StocksVanguard S&P 500 ETF (VOO)
U.S. Mid-Cap StocksVanguard Mid-Cap ETF (VO)
U.S. Small-Cap StocksVanguard Small Cap ETF (VB)
Ex-US Developed StocksVanguard FTSE Developed Markets ETF (VEA)
Ex-US Emerging Markets StocksVanguard FTSE Emerging Markets ETF (VWO)
Real Estate Investment Trusts (REITs)Schwab US REIT ETF (SCHH)
Natural ResourcesSPDR® S&P® Global Natural Resources ETF (GNR)
CommoditiesInvesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PBDC)
U.S. BondsVanguard Total Bond Market ETF(BND)
Treasury Inflation-Protected Bonds (TIPS)Schwab U.S. TIPS ETF (SCHP)
International BondsVanguard Total International Bond ETF (BNDX)
CashSPDR Bloomberg 1-3 Month T-Bill ETF(BIL)

If you’re interested in creating the 7Twelve Portfolio for yourself, you can either use the funds listed in the table above or substitute comparable funds you believe will perform better.

Where to Create a 7Twelve Portfolio

You can build a 7Twelve Portfolio using any major investment broker, since now nearly every one of them offers commission-free trading of ETFs.

The two most prominent broker choices are Charles Schwab and Fidelity. Not only do they offer a wide selection of funds, but they also have 24/7 customer service, and plenty of investor tools and resources.

Since the 7Twelve Portfolio is made up of low-cost, index-based ETFs, you can also create the portfolio through a fund family. Vanguard is a primary example, since many of the funds I used as an example of a 7Twelve Portfolio are Vanguard funds.

It’s easy to see why. Not only does Vanguard have most of the funds you need to create this portfolio, but their funds are commonly used by professional portfolio managers, including robo-advisors. They represent some of the best index funds in the industry, with some of the lowest expense ratios. If you prefer to create the 7Twelve Portfolio through a fund family, Vanguard is one of the top choices.

M1 Finance

Robo-advisors have been growing in popularity in recent years, due to the combination of completely automated investment management with very low advisory fees and minimum investment requirements. The only problem is the vast majority of robo-advisors create portfolios for you based on your risk tolerance, investment goals and time horizon. Very few will permit designing a custom portfolio, like the 7Twelve Portfolio.

But one prominent exception is M1 Finance. That’s because it’s one of the few robo-advisors that allows you to create your own portfolio. You can do that by creating mini portfolios, referred to as “pies”, and fill each with up to 100 individual stocks and ETFs. You can use a pie to create a 7Twelve Portfolio. You can then choose to create an unlimited number of additional pies within your account.

We’ve created the 7Twelve Portfolio in M1 that you can check out and use. You’ll find it here. Note that for commodities we use the iShares Commodities Select Strategy ETF (COMT) fund based on availability on the M1 platform.

M1 Finance charges no commissions for the stocks and ETFs you select for your pies. And once you create a pie, M1 Finance will provide full automated portfolio management – including periodic rebalancing – with no annual advisory fee.

Historical Returns of the 7Twelve Portfolio

Generally speaking, the success or failure of any investment strategy is determined by its historic performance. By that measure, the 7Twelve Portfolio has been a mixed bag. While it has produced positive returns in the 15-year timeframe from 2007 through 2022, it hasn’t performed as well as other, more popular portfolios.

We’ll cover that comparison in the next section. In the meantime, let’s look at the performance of the 7Twelve Portfolio by itself.

(Once again, all screenshots are courtesy of the Portfolio Visualizer.)

The performance results of the portfolio from 2007 through 2022 are as follows:

7Twelve Portfolio performance

Just as has been the case with nearly every portfolio model, the one-year, year-to-date and three-month results have been negative. But the longer term results have been consistently positive, though generally unimpressive.

7Twelve Portfolio vs. 60/40 Portfolio vs. Three Fund Portfolio

Quite honestly, this is where the 7Twelve Portfolio – as brilliant as it may sound in concept – loses its luster. Comparing its performance against other popular investment portfolio models, the 7Twelve Portfolio comes up short on a consistent basis.

We’ve done a head-to-head comparison between the 7Twelve Portfolio, the traditional 60/40 portfolio, and the Three Fund Portfolio.

The 60/40 portfolio employs a simple strategy of investing 60% of your portfolio in stocks and 40% in bonds and cash. The portfolio allocation in this model looks like this:

60/40 Portfolio

The Three Fund Portfolio is a simpler version of the 7Twelve Portfolio. And perhaps not surprisingly, it’s had a better long-term performance – you have to love the power of simplicity!  

The portfolio allocation in the Three Fund Portfolio is as follows:

3-Fund Portfolio

Between the 7Twelve Portfolio, the 60/40 portfolio and the Three Fund Portfolio, what do the investment returns look like?

Once again, I’ve used Portfolio Visualizer to produce the screenshots. They cover the timeframe from 2007 to 2022.

7Twelve Portfolio comparison

The 7Twelve Portfolio has underperformed both the other portfolios over both 10 years and the full 15 years. And while it continued to underperform the 60/40 portfolio for three years and five years, it outperformed the Three Fund Portfolio over both time frames.

If you’re wondering what those percentages translate to in dollars, the results of investing $10,000 in each of the three portfolios from 2007 through the end of October, 2022, look like this:

  • 7Twelve Portfolio: $18,803
  • 60/40 Portfolio: $27,568
  • Three Fund Portfolio: $ 21,002

And if you prefer a graphic illustration:

7Twelve Comparison Chart

When the 7Twelve Portfolio Might Outperform Other Portfolios

The ray of sunshine in the performance comparison above is clearly in the year-to-date and one-year performances. Though all three portfolios have lost money in the past year, the 7Twelve Portfolio has lost a little bit less. Put another way, the 7Twelve Portfolio has outperformed the other two portfolios over the past year.

If the 7Twelve Portfolio has a virtue, it’s that a greater level of diversification provides greater risk reduction during years when the stock market is down – which is exactly what its founder claimed it would do.

It’s also worth noting that at least since 2009, large-cap stocks – as evidenced by the S&P 500 index – have outperformed nearly every other market sector. Since both the 60/40 portfolio and the Three Fund Portfolio have greater allocations in large-cap stocks, they can naturally be expected to outperform the 7Twelve Portfolio in such an environment.

But I do have to caution that the “better” – or less bad – performance of the 7Twelve Portfolio is only over the past year. And that performance is better by only about one percentage point.

That better performance during 2022 may not be enough evidence to prove the greater diversification of the 7Twelve Portfolio will produce better results in down years.

7Twelve Portfolio Pros & Cons

Pros:

  • The portfolio includes most of the major asset classes in the known investment universe.
  • Diversification across 12 different investment sectors provides an opportunity to profit if any one sector dramatically outperforms the general market (think of the energy sector in 2022).
  • There is limited evidence that the 7Twelve Portfolio may outperform other portfolio models during stock market declines.
  • Equal weight distribution of the portfolio creates greater diversification and balance than typical portfolios and index funds, which commonly rely on market weight allocations.

Cons:

  • The 7Twelve Portfolio has underperformed simpler options like the 60/40 and the Three Fund Portfolio over the longer term.
  • This is a relatively complex portfolio, requiring a minimum of 12 funds. That kind of security allocation belies the whole reason investors turn to index funds in the first place.
  • The portfolio can be difficult to manage, especially if you’re doing it manually. You would need to rebalance periodically, which will be cumbersome with a dozen funds.
  • The small allocation in each sector may greatly limit profit potential even if that sector seriously increases.

Who Should Consider the 7Twelve Portfolio?

I’m not sure we can say the 7Twelve Portfolio has proven to be a game-changer in the investment world. Though it does show some potential to outperform other portfolios during years of declining stock and bond markets, that outperformance is only slight. More importantly, it’s insufficient to overcome the greater level of underperformance during the long term.

Filed Under: Lazy Portfolios

ProjectionLab Review – Financial Planning Software

November 28, 2022 by Kevin Mercadante

Some of the links in this article may be affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase or open an account. I only recommend products or services that I (1) believe in and (2) would recommend to my mom. Advertisers have had no control, influence, or input on this article, and they never will.

ProjectionLab is a financial simulator that will help you work out the mechanics of financial planning. It enables you to enter your current financial profile and future projections, then determine when you’ll reach your goals. But it does more than that. It allows you to change inputs and assumptions to account for contingencies and changes in life.

On balance, ProjectionLab is an excellent tool to help you reach your financial independence or retirement goal.

Since space is limited, and this product has so many different moving parts, I’m going to do this review in something more like a summary fashion. If you’d like a more detailed analysis of the ProjectionLab service, you can check out this YouTube video, ProjectionLab Review | Financial Planning Software.

ProjectionLab QuickTake

  • Crunches the numbers to help you reach retirement or financial independence
  • Flexible platform that enables you to run virtually unlimited scenarios
  • Accounts for the life variables that can have a material effect on your retirement plans
  • Focuses on both the accumulation and withdrawal of wealth in pursuing your financial goals
  • Realistic simulations and variables based on real world assumptions

About ProjectionLab

ProjectionLab is a financial planning simulator designed to help you analyze and project your ability to reach financial independence or retirement. It was designed to help you simulate your financial future and run various scenarios to understand the best way to reach your goals.

ProjectionLab was founded by creator Kyle Nolan, under ProjectionLab LLC, based in Boston. The service was initially rolled out in April, 2021, and is admittedly something of a work-in-progress. But Kyle has continued to improve and update the product, both to incorporate a wider range of information and to improve the user experience.

Because ProjectionLab is new and still being developed, no third-party information is available. The company has not been rated by the Better Business Bureau or Trustpilot, and since no mobile app is yet available, there are no user ratings from either Google Play or The App Store.

But even in the absence of third-party information and ratings, my own experience shows this service to be one well worth investigating. It provides comprehensive and useful strategies and projections to help you reach your future financial goals.

Customer service is available by email only, at [email protected] 

ProjectionLab Review

How ProjectionLab Works

Setup

If you want to sample ProjectionLab, you can simply click the “Try for Free” link in the text just above the three Pricing & Subscriptions section on the main page of the website. You’ll be given a choice of either a Normal Walkthrough or Sandbox Mode. Normal Walkthrough is the more detailed of the two, enabling you to fill in your own data as part of the tour.

ProjectionLab Setup

After you click the Continue button, you’ll be brought to the Setup screen, where you’ll enter basic information:

ProjectionLab About You

The next screen will ask you the question “Which of these do you have today?” The choices will be savings, investments, real assets, and debt. You can choose whichever apply to your financial situation.

ProjectionLab Assets and Liabilities

On subsequent screens, you’ll be asked to fill in balances for each of the four categories. You can add multiple accounts within each category.

The investment screen will provide multiple boxes to check that will include taxable investments, various retirement plans, health savings accounts, 529 plans, and even cryptocurrencies. You can click and complete the information for any and all investment accounts that apply to your situation. Note that if you list any accounts as joint, the funds will be divided 50/50 between you and your spouse.

ProjectionLab Investment Accounts

After completing the various financial account inputs, you’ll be brought to the Dashboard page. There you’ll find all the information you’ve entered so far.

ProjectionLab Dashboard

Add Plan

Notice at the bottom left-hand side you see the Add Plan box? If you click that, you can begin adding your long-term financial plan. But don’t forget to name your plan in case you want to create more than one (which is exactly what I didn’t do since I’m only doing one plan).

ProjectionLab Financial Plan

ProjectionLab will ask you to input a plan start date, and then to “set up a few milestones”. That’s when you’ll begin entering the ages at which you expect to retire, the end of plan (your anticipated date of death), and how large your portfolio will need to be to reach financial independence.

The latter is determined by a number multiplied times your expected monthly expenses. In the screenshot, 25 is automatically assumed. This is because multiplying 25 times your expected annual expenses will result in what’s commonly referred to as the 4% safe withdrawal rate. And if you look just below that line, there’s also the capability to add additional milestones.

This is the point at which you are defining the parameters in your journey toward financial independence or retirement. And of course, you can always go in and change the dates later.

ProjectionLab Milestones

In this case, we’re expecting retirement at age 60, and living to age 85.

The next input screen asks you to input the anticipated growth rate of your investments, the expected dividend yield, and anticipated rate of inflation. The screen automatically populates, and I believe the numbers presented are fairly accurate. But you can change them if you like or shift over to actual historical market performance.

Investment, Dividend and Inflation Rates

Notice that some of the input lines have an i next to them. By clicking that icon you’ll get detailed information on how the numbers are calculated.

Income

On the next screen, you’ll enter income. 10 different options are provided, and you can check each that apply.

Income Sources

I’ve entered salary, a side hustle, and for retirement, pension income and Social Security. Notice that not only does each contain the expected income, but also the start date and end date. This recognizes for example, that salary will continue from now until retirement, when pension and Social Security will take over. Side hustle is expected to continue for life.

Sources of Income

Next is the all-important input screen, Cash-Flow Priorities. This is where you’ll enter specific spending priorities, like adding to specific asset accounts for paying extra for the payoff of debts. In this case, I’ve chosen to add an additional $200 per month to be paid toward the student loan.

Expenses

The next screen is entitled Expenses, and this is where you list some variable expenses. There’s a long list here:

Expenses

Conspicuously absent from the list is your mortgage. That’s because it’s included when you enter your house as an asset and will already be reflected in your expenses. You can add any other expenses that apply.

ProjectionLab Expenses Summary

You’ll then come to a Real Assets screen, that will enable you to add future purchases. These include another house, a motorcycle, furniture, a car, a boat, or precious metals, among others. You can add any that apply, and ProjectionLab will calculate those into your financial future.

Income Taxes

You’ll be presented with a screen that will give you a predetermined income tax and capital gains tax rates. You can accept those or make changes to percentages that more accurately reflect your tax situation.

ProjectionLab Tax Assumptions

Output

With all the above entered, we come to an output screen that’s set up as a graph. Based on the input we’ve provided, it shows we’ll reach $1,248,887 in net worth by retirement at age 60. That number will approximately remain constant until the end of life, which means we are not in danger of outliving our money.

ProjectionLab Timeline

Now, those are just the results from setting up a single plan. Not only can you change the input and assumptions and come up with new simulations, but you can also develop additional plans, and compare them. That will give you an opportunity to choose which strategy will work best for you.

Advanced Options

On the top bar of the Dashboard is the Advanced tab. If you click on that, several options will display that will include Monte Carlo Simulation, Withdrawal Strategy, Cash Flow, Compare, and Notes.

The Monte Carlo Simulation is particularly interesting, because it allows you to do up to 94 simulations, each with different input assumptions. It then provides the rate of success in each scenario. For example, it may show an 89.4 % likelihood a simulated plan will be successful, meaning you won’t run out of money before the end of your life.

ProjectionLab Monte Carlo Simulation

This is one of the features of ProjectionLab I find to be most attractive. It gives an opportunity to evaluate the viability of any strategy you run for the simulation, reducing it to a single percentage that makes it easy to compare with other simulations.

Also interesting is the Withdrawal Strategy. You can establish a distribution order outlining which accounts you will begin drawing funds from first. For example, you can set up a hierarchy that includes cash-on-hand first, followed by savings, cryptocurrencies, taxable investments, then finally retirement plans.

PROS

  • Helps project & prepare for financial independence or retirement
  • Flexible platform to accommodate multiple scenarios
  • Flexible low-cost plans + free version
  • No ads, no calls and no selling of your data

CONS

  • New service still working out the bugs
  • Customer support by email only
  • Tax analysis limited

ProjectionLab Plan Pricing & Sign Up

Plan Pricing

ProjectionLab offers three different plans, Basic, Premium and Pro. There are as many as three pricing levels for each plan. If you pay the subscription fee annually, the monthly cost works out as follows:

ProjectionLab Pricing

You can also choose a straight up monthly payment plan. For the Premium plan, the monthly fee will be $12, and $60 for the Pro plan. Be aware that the Pro plan is designed for financial advisors and coaches, who will use it for multiple client profiles. If you are only going to use ProjectionLab for your own purposes, you can use either Basic or Premium.

It’s important to understand the Basic plan will enable you to create simulations, but it does not save data. You’ll need to sign up for the Premium plan to save data, which makes it a logical choice between the three plans offered.

Note also that both paid versions come with a 7-day trial to give you an opportunity to try out the product. If you cancel your subscription at any time within the first seven days, your credit card on file will not be charged.

The third option is available only on the Premium plan. For a one-time payment of $450, you’ll have lifetime access to the service for your own personal use. (The lifetime payment option is not available for the Pro plan.)

Sign Up

If you want to sign up with ProjectionLab you can do so directly from the website by clicking the Start Now or Start Trial buttons under one of the three plans. Once you do, you’ll be asked to create an account, which you can do either by signing up with Google or with Email.

I went for the monthly Premium plan with Google, and it requested my Google email address. Next, I was asked to supply my ZIP Code.

In the very next screen, I was asked to indicate adding a credit card or PayPal, so it’s clear you’ll need to add a payment method to get the 7-day free trial.

Signing up for the actual service will give you the best and longest free look at the service. If you’re not satisfied, you can cancel your order within seven days and your card will not be charged.

ProjectionLab Alternative

Personal Capital is a wealth management service that also offers a free financial aggregator, where you can connect all your financial accounts in one place. And while it doesn’t provide the depth of financial simulations that ProjectionLab does, it does offer its Portfolio and New Worth trackers, as well as Retirement Planner and a Retirement Savings Planner to help you reach your long-term financial goals. Again, the platform is free to use, and you’ll pay only for the Wealth Management service if you choose to take advantage of it.

Final Thoughts

ProjectionLab is an excellent service to help you if your goal is retirement, early retirement, or financial independence. And since the cost is no more than $96 per year for the Premium version, it won’t take a big bite out of the funds you’re trying to save to help you reach your goal.

ProjectionLab is fairly numbers-intensive, and best designed for those who like to crunch a lot of numbers when it comes to finance. If this doesn’t describe you, the service may be a bit overwhelming, and you may be better served using the free version of Personal Capital as an alternative.

ProjectionLab Review Rating

ProjectionLab

Kevin Mercadante

Ease of Use
Cost
Customer Support
Functionality
User Interface

Summary

Financial planning simulator to assist you with planning for financial independence or retirement.Free Basic version, $8/month for the Premium plan, $40/month for the Pro plan.

4.3

Filed Under: Tools

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