A Focus on Tax Efficiency Pays Off

Building a tax-efficient portfolio should be a priority for every investor. Although the decisions made to create a tax-efficient portfolio are small, they always pay off with larger gains in the long term. Inefficient portfolios not only drag on returns, they also can result in a higher tax bill.

As an investor who is focusing on minimizing their tax burden, a first step should be examining where asset classes are held across your entire portfolio. It’s a mistake to treat each investment as an individual entity – your investment portfolio should be viewed as one large entity that has a variety of sub-accounts.

The second step is to properly allocate new money. Deciding whether your funds are in efficient tax accounts now can mean massive differences in your total portfolio after a decade of steady investing. Investing pre-tax money in combination with tax-deferred growth creates benefits that are too substantial to miss out on when planning your investments.

Read more about how tax efficiency and portfolio analysis can result in lower tax bills and higher portfolio values in our article, “Investors’ focus on tax efficiency can really pay off,” in Columbia Daily Tribune.

As a financial planner specializing in comprehensive financial planning, Tim enjoys helping clients in Columbia, MO with managing their taxes, financial risks and other financial issues.

If you would like to learn more about this and other personal financial planning topics serviced by Clarity Financial please contact us at 573-447-7007. Clarity Financial, LLC is a fee-only financial advisory firm in Columbia, MO. Appointments are welcome and initial consultations are free. 

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This article is the property of Clarity Financial LLC.