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Money Buzz 2/04

Tips for diversifying your investments, rising tuition and more

This story appears in the February 2004 issue of Entrepreneur. Subscribe »

Mix It Up

In the '90s, investors sought companies that reinvested earnings for higher profits-and those looking for reliable income streams focused on bonds. But a combination of a less exuberant market and a new tax law lowering the tax rate on dividends is changing that picture, says Ross Levin, president of financial planning firm Accredited Investors Inc. in Edina, Minnesota, who advises investors to consider adding dividend stocks to taxable investment portfolios.

"Dividends are taxed at most at 15 percent and, depending on your taxable income, as low as 5 percent," says Levin. "For those in the highest tax brackets or those who require income from their portfolios, that differential is a huge benefit." Ideally, such investors should diversify holdings by buying a mix of stocks or investing through a mutual fund concentrating on dividend-paying stocks.

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