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Investment strategy and taxes

Although investing wisely is essential to building and protecting your assets, the additional income you earn can also affect the amount you pay in taxes. To minimize this impact, you’ll have to develop a strategy that considers both cash from interest and sales, i.e. “investment gains” as well as the relevant taxes (Note: the more complex your portfolio is, the more likely you are to benefit from a qualified investment professional).

Before you begin, however, you should take a moment to review the following tactics:

Capital gains—Capital gains are profits earned from the sale of an asset such as a stock, bond, or real estate property. The taxes levied on capital gains vary depending upon how long you hold the asset prior to selling, with “short-term” taxes applying to assets held for less than a year and “long-term” apply to assets held for a year or more.

Typically, long-term taxes have a lower rate (the government does this to encourage investment), so it”s often in your best interest to carefully choose and hold onto your investments.


Regulations—You’ll also want to review your state, local, and federal tax codes before you plan or alter your strategy; regulations can and often do vary from year to year so it’s essential to keep yourself informed. Consider arranging a call to your legal or tax advisor haven’t already.

