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tax-efficient investment strategies

A basic risk/return mentality leads many investors to believe that the only way to generate higher returns is to assume additional risk. Taxable non-retirement accounts, however, can present an opportunity for investors to employ a variety of strategies that have the potential to enhance their after-tax returns simply by mitigating tax drag, rather than augmenting their risk profiles. Examples include utilizing tax-free securities, avoiding short-term realized capital gains, reducing portfolio turnover, and opportunistically harvesting tax losses. On a broader level, tax diversification refers to the practice of accumulating assets in various types of accounts that offer different tax treatment. This allows investors to have more flexibility when it comes to their future withdrawal strategies and more control over their tax situations. For instance, having access to retirement funds through tax-deferred and tax-free vehicles can offer savvy retirees the ability to strategically fill up a given tax-bracket before tapping into their tax-free income sources. Although we are not tax advisors (please consult your personal tax professional for specific tax related questions), we are certainly equipped with the necessary knowledge and capabilities to help our clients keep more of what they earn en route to achieving more tax-efficient long-term outcomes.