Wealth Management | Unsymmetric risks vs. Capital Gain Taxes


Unsymmetrical risks vs. Capital Gain Taxes

Tax Efficiency

Tax efficiency is defined as the process of organizing an investment so that it receives the minimum taxation. Business, commercial investments, and even private investment vehicles can experience tax efficiency through planning. When a person causes a change which avoids a higher tax rate they avail the benefits of a change in their tax efficiency rating.

Tax efficiency means paying less to the government due to some changes in the structure of an investment. This can have a minor or an extremely profound effect on net profit depending on the scale of the investment in question. For public market investments, increasing the tax efficiency ratio can be achieved through a variety of means.

Tax free bonds and money market accounts, stocks which are held over one year, and tax efficiency of EFTs other than this can be utilized for an income which is greater than their taxed counterpart.  In personal finances, other investment tools can increase tax efficiency. For proper planning it is important to consult with a wealth manager and find tools best suited to the client’s circumstance.

Tax accountants are the experts in creating tax efficiency. For those who have a large amount of funds tied up in investments a tax accountant is a necessity. These trained professionals can inform the business owner on the proper structuring of business, investment, and personal finances.

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Income vs. Gains
Tax Efficiency

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