Taxes Matter when Investing  

Unfortunately, many financial advisors use investment models and concepts that were created for large institutions and are often suboptimal for tax-paying households. This is great for billion dollar endowments and pensions, which are largely able to grow and compound untaxed, but the reality for tax-paying households and individual investors like you is something far different.  

Taxes matter and they have significant impact on both pre- and post-retirement cash flow and actual, net-of-tax realized investment returns. 

You know this. It’s intuitive.  So why work with a financial advisor who ignores this reality? 

Tax-efficient investing for high net worth investors in portland, OR and Minneapolis, MN

Tax-Efficient Investing 

We believe smart investing is tax-efficient investing.  More, the management of your investment portfolio must connect and interact with the rest of your personal finances making an all-inclusive approach, like our Trailhead Guided Wealth Management service, the best path forward. 

In pursuit of minimizing the taxes you pay over your investment time horizon, a timeline that may span decades, we consider many of the following tax-management strategies when creating our client's investment portfolios:  

  • Contribution Strategies: Should you contribute to a tax-deferred account (like a 401k or 403b), a Roth account, a Health Savings Account (HSA), or a taxable account? 
  • Asset Location: Which account should hold which assets to maximize tax-efficiency over the long-run? 
  • Withdrawal Strategies: How you withdraw money and from which investment accounts, respectively, can have a significant impact on retirement cash flow. 
  • Roth Conversions: Strategically moving tax-deferred assets to a Roth IRA is a great tool for managing retirement cash flow. 
  • Tax-Loss Harvesting: Investment losses should be harvested to offset capital gains and up to $3,000 of taxable income. 
  • Direct Indexing: For individuals or families with larger taxable investment accounts, direct indexing often beats ETFs and mutual funds for tax-efficiency. 
  • Strategic Giving:  Individuals with embedded capital gains in their stock portfolio may want to consider donating the asset to avoid both long-term capital gains and to reduce overall taxable income.  
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