One of John Templeton’s principles in his simple investment plan was to minimize investment taxes. Any money paid in taxes on your investments is money that can’t be working and compounding for your future. This means keeping investment taxes as low as possible is critical to building wealth.
Three Ways to Minimize Investment Taxes
Maximize Tax deferred Accounts
Tax advantaged accounts provide significant benefits in minimizing investment taxes. A Roth IRA provides tax-free income in retirement.. Instead of paying taxes now, build wealth with money that would have been paid in taxes with compounding earnings and tax advantages in a Traditional IRA..
Divide Assets Efficiently
How assets are divided between taxable and tax deferred accounts can have a significant effect on how much in taxes you pay on your investments.
Long-term Capital Gains
Long term capital gains receive favorable tax treatment. Holding assets in taxable accounts for more than 1 year can significantly lower your tax bill.
Using these techniques to minimize investment taxes is part of a simple plan that can have profound effects on how much after tax money you have to meet your retirement goals.
| AAAMP Blog by Ken Faulkenberry | |
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Ken Faulkenberry earned an MBA from the University of Southern California (USC) Marshall School of Business with an emphasis in investments. Ken has 25 years of investment experience and is dedicated to helping people with self-directed investment management through the Arbor Investment Planner. His asset allocation strategies have an outstanding performance record. |
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