Business
In a time where it can feel like a lot of things are out of our control, there are still some things you can do that add tremendous value to your portfolio. Last week, we discussed one of the methods - tax-loss harvesting - and we'll continue this week by looking at asset location. At its core, asset location is essentially a method of managing multiple accounts as one single portfolio. Research has shown with this practice that you can add .5% to .85% to your after-tax return, which over a 30 year period can be up to an additional 15% after-tax return. Some investments in your portfolio - like bonds - pay you interest. If this is held in a taxable account, it will be taxed annually at a fairly high rate depending on your tax bracket. This ultimately hurts your take home return, so we utilize asset location to ensure those assets are not taxed annually and instead other assets likes stocks are the ones held in your taxable accounts. This is a highly-specialized tactic that gets the most mileage from being utilized with our clients that are in the highest tax bracket with high levels of complexity. Listen for more details and answers to questions including: What is asset location? How does asset location work? How can this practice save money over the long-term? Who most benefits from this practice? How can I tell if my portfolio is utilizing asset location?