David@valuealigned.com
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Berk's Blog

Avoid the Tax Pitfalls of Mutual Funds – Keep It Separate, Stupid!

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This is the third post of a four-post series about my new white paper, “Stop Wasting Your Money in Mutual Funds,” which exposes how hidden mutual fund fees are costing investors like you millions of dollars. To receive your free copy, click here and enter your email as prompted.

Tax season often causes many surprises. But mutual fund-related taxes can cause some of the most devastating surprises of all.

separately-managed-accounts

The mutual fund system is inherently flawed – because mutual funds are forced by law to distribute their income to shareholders, who are then taxed by Uncle Sam.

Sometimes capital gains distributions are paid out during a year when a mutual fund loses money. But you will still have to pay taxes on the pay-out – even if you reinvest it!

What’s the key to avoiding tax surprises caused by mutual fund capital distributions? Investing in separately managed accounts.

Separately managed accounts provide tax management benefits through flexible, personalized direct ownership and transparency. You see in real-time what goes on in your account – and you can even control when you take your taxable gains and losses, which can help you offset losses and gains in your other accounts.

Through separately managed accounts with a firm like ValueAligned® Partners, you can sell any stocks in your portfolio that declined and pay no tax whatsoever – even if the overall portfolio increased in value. And you’ll realize a capital loss on the declined stocks that you can use to offset other capital gains.

Besides conferring tax benefits, separately managed accounts allow you to own shares of great companies directly – without the middlemen at the mutual fund companies and at the investment banks, and without all the layers of fees and expenses.

Do you know if you have received surprise taxable distributions in your mutual funds?

Don’t allow this devastating cycle to repeat each year. Read my new white paper to learn more about separately managed accounts. To receive your free copy today, click here and enter your email as prompted.

 

Image credit: dhester l morguefile