We discussed previously that the tax code functions like an incentive system if done right. Virtually anyone can put their money towards tax-incentivized investments and reduce their tax payout. But among our options, which investments bring in the best returns?
What Can Wall Street Do For Us?
Wall Street makes investing seem easy. They educate people constantly through their marketing about the ease of investing on their platforms. It’s common knowledge that most people invest this way. However, what isn’t said is that the vehicles they offer to invest in generally lead to higher taxes. Here are some examples:
Now here’s another investment tool that’s widely popular but tricky: 401Ks. We’ve all been told to put money towards this fund. 401Ks are marketed as a way to save on taxes. You contribute now and don’t have to pay tax on those dollars. You invest and let the account grow.
But the theory that you pay taxes in a lower tax bracket when you retire is false. As the Wall Street marketers tell us, you pay taxes on the funds withdrawn when you retire and that presumably you will be in a lower tax bracket when you retire.
The only way that could be true is if you plan to live on less money when you retire. I don’t know about you but my retirement plan is to travel more, play more golf, and live comfortably until the end. I plan to need more money when I retire.
Overall, there really aren’t many tax benefits to investing in the products that Wall Street offers. All the returns described previously (primarily interest, dividends and capital gains) are taxed at various rates from 15% to over 40%.
How To Follow The Incentives to Main Street and Get Paid
The good news is there are many other ways to invest and the tax code will actually tell you the kinds of investments that get the most favored treatment. Remember that we shouldn’t only measure how much our investments make for us… we should really measure how much we get to keep.
Get Incentives Out of Your Investments
As Tom Wheelwright, a well-known tax code expert, says: If you use the tax code as your guide, you can make way more money and pay way less tax. Just the way it was designed to be.
At Match Real Asset Partners, we work hard to find investment solutions that can reduce your tax burden, protect your wealth, and produce passive-cash flow.
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Disclaimer: Please note that I do not know your personal tax situation and you should not consider this to be tax advice for you. Take what you’ll learn here and consult with your own tax advisor to determine if any of these tax topics can fit your personal situation.