Broker Check

Planning Your Investments? Think About Tax

March 08, 2023

Thinking about investment strategy may conjure thoughts of stock trading, ticker symbols, brokerage accounts, and investment theses. But one of the most important factors in developing an investment strategy is the tax aspect.

There are several tax-efficient investing strategies that individuals can use to help grow their retirement savings while minimizing the impact of taxes. Here are a few such strategies:

One of these tax-efficient strategies for retirement investing is to contribute to tax-advantaged retirement accounts such as 401(k)s, Traditional IRAs, and Roth IRAs. Contributions to these accounts may be tax-deductible or tax-free, depending on the type of account and the individual's tax situation. This can help to reduce the overall tax burden on retirement savings and potentially increase the amount of money available for investment.

Tax-loss harvesting is another strategy that can be used to save on your tax bill. It involves selling investments that have lost value to offset capital gains from other investments. By doing this, individuals can reduce their overall capital gains tax liability and potentially increase the net return on their investments. This strategy can be particularly useful for those with a high net worth or a large sum of investments, but keep in mind that it is a complex maneuver and there is always a chance that you missed something when your tax bill rolls around.

Certain mutual funds and exchange-traded funds may have tax-efficient holdings such as municipal bonds. In addition, these types of funds can sometimes carry very low management fees. When you owe less in fees on a regular basis, there is more left over in your wallet to reinvest and take advantage of the power of compounding gains.

Overall, there are many tax-efficient strategies that individuals can use to help grow their retirement savings. By considering the tax implications of their investment decisions and taking advantage of tax-advantaged accounts and tax-efficient investment options, individuals can potentially increase the net return on their retirement savings and improve their financial security in retirement.


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This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.