Tax implications should be considered in asset allocation decisions from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
When constructing an asset allocation strategy, it is crucial to take into account the tax implications of your investment decisions. Taxes can have a significant impact on the overall return of your portfolio, so it is essential to consider them when determining the optimal mix of asset classes in your investment portfolio. By carefully evaluating the tax consequences of different investment choices, you can potentially minimize your tax liability and maximize your after-tax returns. One key consideration when evaluating the tax implications of asset allocation decisions is the difference in tax treatment between different types of investments. For example, investments held in taxable accounts are subject to capital gains taxes, while investments held in tax-deferred accounts like IRAs or 401(k)s are not taxed until withdrawals are made. By considering the tax implications of each type of account, you can make more informed decisions about where to hold different types o...
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