5 Ways to Minimize Taxes in Your Investment Portfolio


Tax season is upon us. Don’t leave your money on the table for the IRS. Instead, let us help you make sure your investment portfolios are as tax-efficient as possible so that you’re not losing out on any returns due to taxes than necessary.

We have 5 simple strategies to minimizing taxes in your investment portfolio.

  1. Hold On to Your Investments
    Hold on to your investments for more than one year, if possible. If you sell an investment after holding for more than 12 months and it is worth more than you paid for it, you are taxed at long-term capital gains tax rates.
  2. Utilize Tax-Sheltered Accounts
    Utilize tax-sheltered accounts to hold investments, such as IRA’s, Roth IRA’s, 401(k), and 403(b) plans whenever possible.
  3. Utilize Index Funds
    If you invest in mutual funds, utilize index funds. Index funds tend to minimize taxes compared to actively-managed mutual funds. Sometimes (like 2018) the value of your actively-managed stock mutual fund will be lower at the end of the year compared to the beginning, but they will issue a tax liability for capital gains!
  4. Purchase Individual Securities to Match Risk Tolerance
    If your portfolio is large enough, purchase individual securities to match your risk tolerance. By owning shares directly in a company, you are able to control the capital gain/loss opportunities.
  5. Invest in Municipal Bonds for Fixed Income Allocation.
    Consider investing in municipal bonds for your fixed income allocation. Municipal bonds provide tax advantages in comparison to corporate bond holdings.

Have more questions or would like to speak to a banker?

Contact Gary L. Popkes, CFP® | Senior Vice President – Wealth Management & Trust Services or Brad Lupkes | Wealth Advisor here at Frontier Bank .

WM&T Team

Phone: 605-332-3832 Downtown Sioux Falls | 712-472-2538 Rock Rapids


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