NEW YORK (ETF Expert) -- An acquaintance in luxury homebuilding once confessed to me that many of his clients compensated him in cash.
Similarly, he paid many of his subcontractors in greenbacks. "The world of construction," he explained, "doesn't account for a wide range of financial transactions."
"Sounds a bit like the restaurant business," I said. After all, who hasn't under-reported tip income as a waiter? And what restaurant upstart hasn't kept a bit of cash flow off of the books.
He nodded, then uttered, "It's not what you make... it's what you keep."There's a fair amount of irony in the fact that a pull-yourself-up-from-the-bootstraps carpenter was explaining to me, an investment adviser, the difference between gross income and net income. Then again, this carpenter had become one of Orange County's premier custom homebuilders. Perhaps surprisingly, a great many people cannot make the distinction between gross and net. For example, a sole proprietor may gross $380,000 and net $125,000 after overhead. Yet the masses may see this individual in the same light as a real estate entrepreneur who grosses $380,000 in property sales, but only has exposure to capital gains taxes. This lack of understanding between what we make and what we keep has far-reaching implications. For instance, over the last 3 1/2 years, millions of jobs have been created. We made them... we're America. Unfortunately, the net amount of what America actually kept over the last 3 1/2 years is less than exhilarating. Specifically, the proportion of the working age population currently working is at its lowest level in more than three decades. The unemployment rate simply doesn't account for a net loss in jobs when millions of people stop looking for them. "Gross" and "net" are applicable to our investment portfolios as well. In spite of major cities declaring bankruptcy -- Scranton, Pa.; San Bernadino and Stockton in California -- investors have yet to throw in the muni bond ETF towel. Far from it! Muni Bond ETFs: Nothing But Net Here are some funds, their approximate six-month percentages and their tax-equivalent yields for the 33% tax bracket, as compared with the ETF proxy for the Standard & Poor's 500:
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