3 Ways to Deal with Taxes

There are three ways to deal with taxes in a taxable investment.

1.Increase taxes (as the investment grows)

2.Flatten taxes

3.Reduce taxes

There is actually a fourth option, which becomes obvious, and that would be to move the entire account to a tax favored position.  This discussion illustrates the results of a client keeping this type of investment.

Important:

This module of Tax Master - Increase, Flatten, or Reduce - is intended to be used as an educational tool to illustrate the effects of taxes on a hypothetical taxable account, and the tax effect of moving none, some or all into a hypothetical tax-favored account. If life insurance is discussed as one tax-favored alternative, there must be a need for the death benefit protection before life insurance would be considered a suitable financial product. In addition, agents may not comment on, advise or evaluate any securities product if they are not registered to offer securities.

There are several ways to deal with the taxes due from compounding interest in a taxable investment.  The first and most obvious would be to move the entire account to a tax favored position.  This is not always possible or the most prudent thing to do.  There are basically three things you can do which we will cover together.

No math presented on this screen.