Since taxes can reduce the effective yield of your portfolios, tax planning should play an important role in your comprehensive investment strategy. This section offers helpful tips and investment ideas to help you maximize the after-tax return from your investments.
For example, in a rising interest rate environment, certain investors may be interested in selling bonds that have depreciated in value in order to generate capital losses. The proceeds can be reinvested in higher-yielding instruments and the capital losses may be used to offset capital gains from other investments.
Of course, you should carefully consider your tolerance for risk as well as your overall financial goals before making any investment decisions. Remember that comprehensive planning entails both tax and financial considerations. You should speak to your tax advisor before making any decisions.