Strategies for Lowering Investment Taxes
Choosing investments with built-in tax efficiencies helps you minimize returns lost to taxes. We recommend using EFTs as a foundation in most portfolios for the tax advantage. Due to the way the transactions settle, you can usually avoid triggering Capital Gains.
Look for Opportunities to Offset Gains
- You’re only taxed on net capital gains, so any realized losses can help lower your tax bill.
- If you know you’re going to have realized gains, look for opportunities to realize losses and offset them.
- For example, if you have shares of stocks that have lost value since you purchased them, you may consider selling them.
This is a Strategy known as “Tax Loss Harvesting.”
Divide assets among the right types to hold your investments.
Taxable accounts should hold tax‑efficient assets like:
Index mutual funds
Index ETFs
Tax-exempt bonds
Stocks.
Nontaxable accounts should hold less tax‑efficient assets like:
Actively managed mutual funds
Taxable bonds
If you have questions or would like to speak with one of our tax professionals about your situation.