[IMGCAP(1)][IMGCAP(2)]Investors try to maximize investment returns while managing the level of risk in their portfolios. But only after-tax investment returns are truly available to the investor. Tax consequences should be considered before making any investments. Tax treatment, good or bad, can have a significant impact on an investment decision.
Investments come in many forms and can fall anywhere on the spectrum of tax efficiency. Portfolios should be structured according to the tax efficiency of particular investments, as well as to an investor’s unique set of circumstances. Depending upon the availability of taxable and tax deferred investment account balances, the most tax efficient investments should be placed in taxable accounts, and the least tax efficient investments should be placed in tax deferred accounts. Investment placement should continue using tax efficiency criteria until all assets are placed.
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