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Tax-Aware Investing

A higher net return, without higher risk is possible by minimizing investment taxes.

Tax-Aware Investment Management

Tax-Aware Investing: A Win-Win for Your Net Return

Pro-active, tax-aware investing can maximize the net return on your investment portfolio(s) without adding risk. The benefits of tax-aware investing can be especially significant for large portfolios that generate sizable income and capital gains annually.

We start by giving your portfolios, as well as your asset base, a tax tune-up, seeing where we might be able to get a higher level of tax efficiency while adhering to strategic asset allocation targets. This can include strategically realizing gains and losses and maximizing tax-free or tax-deferred income.

There are many incremental steps we can take to offset your cumulative tax bill as we tax-manage your investment strategy. By providing investment-tax information and analysis to your CPA(s), we can help inform and align tax strategies for better outcomes.

Our aim is a higher net investment return without additional risk. Some of the strategies we deploy include:

Asset location and allocation

The tax treatment of your investment accounts — taxable, tax-deferred or tax-free — can greatly affect net return over time. We advise on strategies to optimize net return for you and your beneficiaries by minimizing taxes on taxable investments, making the most of tax-deferred investments, including in the private markets, and creating a base of tax-free investments, be it via municipal bonds or Roth IRA conversions. We also advise on withdrawal strategies from your various accounts to maximize tax-efficiency, in line with your need for income.

Tax-loss harvesting

Especially during market downturns, we try to make the most of loss positions through tax-loss harvesting. This involves selling specific investments at a loss and using that loss to offset capital gains taxes in the future. The investment is replaced by a similar one, maintaining optimal asset allocation and expected return targets.

Over time, lower investment taxes mean you may end up with a higher net return, without having to take on extra investment risk. That’s the win-win.

Tax-aware manager selection

When selecting what to invest with whom, we focus on asset managers who make it a point to limit investment taxes, either by not trading as often to avoid short-term gains and/or coordinated tax-loss harvesting. We’ll suggest investing with an asset manager only if we are confident in their potential to generate the targeted risk-adjusted return after taxes.