While returns are nice, after-tax returns are what really matter.  Investors should take advantage of every legal mechanism available to reduce the taxes owed on their investment gains.  Geometric helps our clients minimize their tax burden in several different ways:

First, we ensure that every client take full advantage of any and all tax-advantaged accounts available to them (401(k)s, IRAs, Roth IRAs, 529 College Savings Plans, Health Savings Accounts, etc.).  Maximizing an investor’s usage of tax-advantaged accounts – in which the investments grow tax-free or tax-deferred – can make an enormous difference over time, especially to those in high tax brackets.

Second, we strategically place certain assets in certain account types.  Some asset classes (bonds, REITs, etc.) are tax-inefficient and should be held in tax-advantaged accounts whenever possible, while others (most passively-managed stock mutual funds and ETFs) are tax-efficient and can be owned in any account.  By carefully locating assets in the proper account type, the entire portfolio becomes dramatically more tax-efficient.

Next, we are strategic about when to realize gains within a portfolio.  There are situations when an investor should avoid realizing gains and situations when doing so is desirable.  By understanding each client’s unique circumstances and tax profile we attempt to optimize these decisions.

Lastly, we continuously monitor our clients’ portfolios for tax loss harvesting opportunities.  ‘Harvesting’ a loss (selling a depreciated investment to lock in a loss, waiting the required 31 days, and then buying it back) can be hugely valuable in certain situations, and we work with our clients to identify them.