Tax-managed investing 101
New to the active tax management concept? Explore this page for the highlights.
What is active tax managed investing?
Active tax-managed investing is a multi-step process aimed at decreasing the yearly taxation and long-term tax drag of capital gains or dividends in non-tax-deferred portfolios.
How does tax management help me?
In a world where investors are fixated on a pre-tax investment perspective, after-tax investment value tends to be an afterthought.
Yet, the compounding tax drag nevertheless continues to weigh down portfolios and reduce returns. Fortunately, this perpetual problem has a systematic solution in the form of active tax management. Designed to target actual problems faced by investors, this dynamic approach carries out real-time, year-round measures aimed squarely at minimizing avoidable losses and maximizing after-tax wealth.
How can tax drag negatively impact my ending wealth?
Even a 2% tax drag can have a massive effect on your portfolio. Our interactive Value of Tax Management calculator can show you the hypothetical effect this tax drag has on your investment outcomes.
Consider the hypothetical growth of a $100k portfolio over 10 years at a 7.5% return each year. If the portfolio's pre-tax return had a 2% tax drag, that portfolio would have an ending value of $171k. With optimal tax drag, that portfolio would have an ending value over $200k.
Try it out with our simple calculator and see how tax drag impacts your portfolio:
Description of Customizable Inputs
This is the total value of assets you want to model.
Enter the number of years (10 or less) you want to model.
Where can I learn more about tax-managed investing?
Tax management blog posts from Russell Investments' experts