Gabe Fransen | December 20, 2024
As we come to the end of another year where you may be excited about the growth of your investments, we should be cognizant that with the benefits of growth in taxable accounts, there may be tax implications. As investment advisors, we look to help clients identify ways in which taxes can be lowered for our clients, but in the case of taxable gains on investments, we like to celebrate that more taxes are owed due to account performance.
Paying those taxes may not be your favorite thing, but here’s the upside: tax on long term gains is generally lower than ordinary income tax that you pay on your salary income or from distributions from tax deferred accounts. To help mitigate the extent of the tax impact, we use a strategy called tax-loss harvesting when possible. This is a strategy where investments that didn’t perform well can be sold to offset the taxes on the positions that have done well.
While we might sigh at the tax bill, remember that today’s taxes on your gains can be attributed to the growth of your investment. Here’s to celebrating your financial success, even with taxes in the mix.
