Taxes are an unfortunate side effect of successful investing, but there are ways to avoid it. You can build a tax efficient investing strategy to help lower those taxes over time. More importantly, it will leave more money in your pocket to reinvest, compound, and grow.
A tax efficient investment strategy is nothing new. It’s been used by the wealthy since tax codes were enacted. It’s legal and you don’t need a high-priced CPA to put an effective strategy together. If you know the current tax rates, you are half way there. After that you just need to know how to use the tax code in your favor. In order to do that we need to start with the basics.
What Is Tax Efficient Investing?
Taxes eat into your investment gains like any other costs. This puts a limit on how your money grows. But thanks to our overly complex tax system, you have ways to reduce, suspend, or eliminate them.
The basic tax efficient investing strategy should lower your tax liability based on your financial goals both now and in the future. When done right, it should maximize your after tax dollars, which is the ultimate goal. Continue Reading…