Tax-Optimized Investing
Maximize Your Returns Through Tax Efficiency
Our tax-optimized investment strategies help you keep more of what you earn by minimizing the impact of taxes on your investment returns.
Through careful asset location, tax-loss harvesting, and strategic withdrawal planning, we design portfolios that generate higher after-tax returns without increasing your investment risk.
Key Tax Optimization Strategies
Comprehensive approaches to minimize your tax burden
Strategic Asset Location
Place investments in the most tax-advantaged accounts based on their tax characteristics.
- Tax-inefficient assets in tax-advantaged accounts
- Tax-efficient assets in taxable accounts
- Customized allocation across account types
- Up to 0.75% higher after-tax returns
Tax-Loss Harvesting
Strategically realize investment losses to offset capital gains and reduce your tax liability.
- Offset capital gains with losses
- Deduct up to $3,000 against ordinary income
- Automated monitoring for opportunities
- Maintain desired market exposure
Tax-Efficient Withdrawal Strategy
Optimize the sequence of withdrawals from different account types to minimize lifetime taxes.
- Withdrawal order optimization
- Strategic Roth conversions
- Required Minimum Distribution planning
- Social Security tax coordination
Tax-Efficient Investment Options
Investments designed to minimize tax impact
Index ETFs
Low turnover and tax-efficient structure minimizes capital gains distributions.
Municipal Bonds
Interest payments exempt from federal taxes and potentially state taxes for residents.
Direct Indexing
Own individual securities to enable customized tax-loss harvesting opportunities.
Growth Stocks
Companies that reinvest profits rather than paying dividends can defer taxes until sale.
Tax Savings Calculator
See how much you could save with tax-efficient strategies
Your Potential Tax Savings
Standard Portfolio
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Tax-Optimized Portfolio
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Estimated Tax Savings
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Account Types for Tax Optimization
Strategic use of different account types is key to tax efficiency
Tax-Deferred Accounts
Investments grow tax-free until withdrawal. Contributions may be tax-deductible now, with taxes paid upon withdrawal.
Best for:
- Bonds and fixed income
- REITs
- Actively managed funds
- High-dividend stocks
Examples:
- Traditional 401(k)
- Traditional IRA
- SEP IRA
Tax-Free Accounts
Contributions are made with after-tax dollars, but investments grow tax-free and qualified withdrawals are completely tax-free.
Best for:
- High-growth assets
- Assets with highest expected returns
- Small-cap stocks
- Emerging markets
Examples:
- Roth IRA
- Roth 401(k)
- Health Savings Account (HSA)
Taxable Accounts
No special tax advantages, but offer greater flexibility and access to funds without penalties or age restrictions.
Best for:
- Tax-efficient index ETFs
- Municipal bonds
- Individual stocks (for tax-loss harvesting)
- Growth stocks with low dividends
Tax Considerations:
- Preferential rates on long-term capital gains
- Step-up in basis at death
- Tax-loss harvesting opportunities
Frequently Asked Questions
Common questions about tax-efficient investing
Tax-loss harvesting is a strategy where you sell investments that have declined in value to realize a capital loss, which can then be used to offset capital gains in your portfolio. If your losses exceed your gains, you can use up to $3,000 of the excess loss to reduce your ordinary income. Any remaining losses can be carried forward to future tax years.
For example, if you bought a stock for $10,000 that's now worth $7,000, you could sell it to realize a $3,000 loss. This loss could then offset $3,000 in capital gains elsewhere in your portfolio, reducing your tax bill. After selling, you would typically reinvest the proceeds in a similar (but not identical) investment to maintain your desired market exposure while avoiding the IRS "wash sale" rule.
Asset location is the practice of strategically placing investments in different account types (taxable, tax-deferred, and tax-free) based on their tax characteristics to minimize the overall tax impact on your portfolio.
For example, tax-inefficient investments that generate ordinary income (like bonds or REITs) are best held in tax-deferred accounts like traditional IRAs or 401(k)s. Meanwhile, tax-efficient investments that generate long-term capital gains or qualified dividends (like index ETFs) are often best held in taxable accounts where they can benefit from preferential tax rates.
Proper asset location can improve your after-tax returns by up to 0.75% annually without changing your asset allocation or increasing your investment risk.
The conventional wisdom for retirement withdrawals is:
- First, take Required Minimum Distributions (RMDs) from traditional retirement accounts
- Next, withdraw from taxable accounts
- Then, withdraw from tax-deferred accounts like traditional IRAs
- Finally, withdraw from tax-free accounts like Roth IRAs
However, a truly optimized withdrawal strategy often involves more nuance, potentially including strategic Roth conversions during low-income years, coordinating with Social Security claiming, and tax bracket management. Our advisors can help you develop a personalized withdrawal strategy based on your specific situation, account types, and income needs.
Ready to Optimize Your Investment Tax Strategy?
Our tax specialists can help you create a customized plan to minimize taxes and maximize your after-tax returns.