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Minimize Taxes, Maximize Returns-- If you have both taxable and tax-deferred retirement accounts, keep the equity in taxable accounts and bonds in the deferred. Younger investors may benefit from reversing that strategy. -- For taxable accounts, choose equity funds that emphasize capital gains, mainly the riskier small- and midcap funds. Compare a fund's pre- and aftertax returns. The closer the numbers, the more tax-efficient the fund. -- Index funds are among the most tax-efficient. For most investors, bond funds held outside retirement accounts should be tax-exempt municipal bond funds. -- In a laggard fund, a new portfolio manager can be a blessing. But a portfolio overhaul could result in huge taxable distributions.
-- Mutual funds with large losses can make smart investments if the fund rebounds. Those losses can shelter new gains.
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Updated Jan. 22, 1998 by bwwebmaster
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
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