Investing and Taxes Special Report | Adviser Investments
Special Report

Investing and Taxes

August 25, 2022

We all know that taxes are one of life’s certainties—one that many people would prefer to avoid. However, singularly focusing on minimizing your tax bill each year could compromise your investment plan and its potential gains. A long-term perspective, preparation and planning to manage your annual tax burden can help you strike a balance between paying less in taxes and improving your portfolio’s returns over time.

Taxes are a cost—reducing the amount of income and capital gains you keep—and as with all costs, keeping taxes low is a sensible practice. But be wary of “letting the tax tail wag the portfolio dog.” By that we mean that investors sometimes take their tax reduction efforts too far and lose sight of the real goal of investing—it’s not about writing the smallest check to Uncle Sam, but maximizing your after-tax dollars. The path to one doesn’t always lead to the other.

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