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Tax Allocation: How to Keep Your Wealth

What good is it to generate wealth if you are not able to hold on to it?

Investing is not just about what you earn, but also about what you keep. So, is your investment advisor helping you keep your wealth?

Tax Allocation

Tax allocation is incredibly vital for an investment portfolio. The right blend of tax-deductible, tax-deferred, non-deductible and tax-free investments can reduce your taxes today as well as in the future.

This means for the wealth you create, you’ll actually get to keep it in larger portions.

Before an investor can determine how to make their portfolios more tax efficient, they must understand how their accounts are organized according to the law. Investment accounts are generally considered taxable, tax-deferred or tax-exempt. Knowing which of these categories your investments fall into is a step in the right direction.

Tax -deferred vs. taxable investment accounts

What types of accounts do you have? If you have a 401(k), IRA or a Roth IRA, then you have tax-deferred accounts. If you have joint investment accounts, bank accounts and/or money market mutual funds, these accounts are taxable.

While there are pros and cons to both, most investors would agree that having a mix is usually better than putting all your eggs in one basket. Unfortunately, many people don’t know the benefits of tax allocation and instead allocate all of their money and investments in one type of account – sometimes in accounts that have never been taxed. This will make things far more complicated when it comes time to distribute funds when they hit retirement age.

Having the right tax allocation will help you succeed today and into the future, and will help you not only create but keep your wealth.

That’s why it is so important to seek an advisor who understands your specific needs and will work with you to help you keep your wealth. Are you interested in knowing more about how LexION Capital can help you create and keep your wealth? Don’t hesitate to reach out to us today.