Tips for Helping You Beat Those Annoying Fees and Taxes

By Alan Olsen, CPA, MBA (tax)
Managing Partner
Greenstein Rogoff Olsen & Co. LLP


“How do I beat all of those bothersome taxes and fees and get more return on my investments?” It’s a question that almost all investors ask, but it’s one that many people never get answered. In order to get the most out of your investment portfolio you need to know how to cut back on some of those taxes and fees. Just a couple of percentage points can make a huge difference when you’re dealing with large sums of money.

Manage Your Portfolio Wisely

Although they can seem small on the surface, these taxes and fees can start to add up and in no time at all the hits on your return start to add up. Anything you have to give away instead of keep is damaging to your overall investment return. That’s why if you want to make the most of your returns you need to take the proper steps to keep your possible tax exposure down and your management fees to a minimum.

Keep More for Yourself

One problem is that many investors are too focused on their portfolios and they miss out on opportunities to keep more of their money by ignoring their expenses. By running an efficient portfolio and taking advantage of every money-saving opportunity you can keep more of your gains. So what does it take to improve the overall tax efficiency of your portfolio? There are actually several things you can do.

  • Tax Efficient Managers – choose your tax manager wisely. By selecting a tax manager with high turnover, shorter holding periods and higher fees you are going to have a less tax-efficient portfolio. Instead focus on low turnover and low fees, which can improve your tax efficiency.
  • Structuring your Portfolio – in order to have a successful investment portfolio you need to structure it wisely, with the right balance of stocks, bonds and other assets. Then, by properly allocating your assets you can cut back on your tax losses.
  • Indexing – another way to be more efficient is by investing in index funds, for which the annual fee is 0.17 percent compared to the fee of the average U.S. equity fund, which is 1.03 percent. Stock turnover also tends to be 10 times lower in index funds.
  • Harvest your losses – another way to save on taxes is by harvesting your tax losses. Essentially, this means that you sell your securities at a loss in order to help offset a liability for capital gains. In other words, if your investment takes a hit, you can sell it and claim the loss. You then move your money into another investment. This won’t remove the loss, but it can help ease the blow.

Invest Smart, Pan Smart

The bottom line, when it comes to saving on taxes and fees on your investments, is that you have to be smart. You have to pay close attention to all of the opportunities to save, even the small ones. When you invest you want to maximize the full amount of your return. Keeping as much of your money as you can by avoiding, eliminating or minimizing these taxes and fees, is a great way to keep more of your return for yourself. If you need further assistance with tax planning and preparation, then give GROCO a call at 1-877-CPA-2006 or contact us online.




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